*HB1349.1*

February 17, 2015

HOUSE BILL No. 1349_____

DIGEST OF HB 349 (Updated February 16, 2015 1:39 pm - DI 113)

Citations Affected: IC 6-3; IC 6-3.1; IC 6-3.5; IC 6-5.5; IC 6-6;IC 6-8; IC 6-8.1; IC 8-24; noncode.

Synopsis: Various tax matters. Eliminates various adjustments toincome for purposes of determining Indiana adjusted gross income.Eliminates various income tax exemptions, deductions, and credits.Provides that business income is all income apportionable to the stateunder the Constitution of the United States. Eliminates the taxation ofincome that is attributed to a state that does not have an income tax (the"throwback rule"). Provides that sales of a broadcaster that arise fromthe broadcast or other distribution of film programming or radioprogramming are in this state if the commercial domicile of thebroadcaster's customer is in this state. Broadens the addback to Indianaadjusted gross income related to intercompany interest expenses. Usesthe most recent Internal Revenue Code for determining the earnedincome tax credit. Provides for a tax amnesty program. Makes technicalcorrections and conforming amendments.

Effective: July 1, 2015; January 1, 2016.

Huston

January 13, 2015, read first time and referred to Committee on Ways and Means.February 16, 2015, amended, reported — Do Pass.

HB 1349—LS 6858/DI 58

February 17, 2015

First Regular Session of the 119th General Assembly (2015)

PRINTING CODE. Amendments: Whenever an existing statute (or a section of the IndianaConstitution) is being amended, the text of the existing provision will appear in this style type,additions will appear in this style type, and deletions will appear in this style type. Additions: Whenever a new statutory provision is being enacted (or a new constitutionalprovision adopted), the text of the new provision will appear in this style type. Also, theword NEW will appear in that style type in the introductory clause of each SECTION that addsa new provision to the Indiana Code or the Indiana Constitution. Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflictsbetween statutes enacted by the 2014 Regular Session and 2014 Second Regular TechnicalSession of the General Assembly.

HOUSE BILL No. 1349

A BILL FOR AN ACT to amend the Indiana Code concerningtaxation.

Be it enacted by the General Assembly of the State of Indiana:

1 SECTION 1. IC 6-3-1-3.5, AS AMENDED BY P.L.205-2013,2 SECTION 80, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE3 JANUARY 1, 2016]: Sec. 3.5. When used in this article, the term4 "adjusted gross income" shall mean the following:5 (a) In the case of all individuals, "adjusted gross income" (as6 defined in Section 62 of the Internal Revenue Code), modified as7 follows:8 (1) Subtract income that is exempt from taxation under this article9 by the Constitution and statutes of the United States.

10 (2) Add an amount equal to any deduction or deductions allowed11 or allowable pursuant to Section 62 of the Internal Revenue Code12 for taxes based on or measured by income and levied at the state13 level by any state of the United States.14 (3) Subtract one thousand dollars ($1,000), or in the case of a15 joint return filed by a husband and wife, subtract for each spouse

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1 one thousand dollars ($1,000).2 (4) Subtract one thousand dollars ($1,000) for:3 (A) each of the exemptions provided by Section 151(c) of the4 Internal Revenue Code;5 (B) each additional amount allowable under Section 63(f) of6 the Internal Revenue Code; and7 (C) the spouse of the taxpayer if a separate return is made by8 the taxpayer and if the spouse, for the calendar year in which9 the taxable year of the taxpayer begins, has no gross income

10 and is not the dependent of another taxpayer.11 (5) Subtract:12 (A) one thousand five hundred dollars ($1,500) for each of the13 exemptions allowed under Section 151(c)(1)(B) of the Internal14 Revenue Code (as effective January 1, 2004); and15 (B) five hundred dollars ($500) for each additional amount16 allowable under Section 63(f)(1) of the Internal Revenue Code17 if the adjusted gross income of the taxpayer, or the taxpayer18 and the taxpayer's spouse in the case of a joint return, is less19 than forty thousand dollars ($40,000).20 This amount is in addition to the amount subtracted under21 subdivision (4).22 (6) Subtract an amount equal to the lesser of:23 (A) that part of the individual's adjusted gross income (as24 defined in Section 62 of the Internal Revenue Code) for that25 taxable year that is subject to a tax that is imposed by a26 political subdivision of another state and that is imposed on or27 measured by income; or28 (B) two thousand dollars ($2,000).29 (7) Add an amount equal to the total capital gain portion of a30 lump sum distribution (as defined in Section 402(e)(4)(D) of the31 Internal Revenue Code) if the lump sum distribution is received32 by the individual during the taxable year and if the capital gain33 portion of the distribution is taxed in the manner provided in34 Section 402 of the Internal Revenue Code.35 (8) (6) Subtract any amounts included in federal adjusted gross36 income under Section 111 of the Internal Revenue Code as a37 recovery of items previously deducted as an itemized deduction38 from adjusted gross income.39 (9) (7) Subtract any amounts included in federal adjusted gross40 income under the Internal Revenue Code which amounts were41 received by the individual as supplemental railroad retirement42 annuities under 45 U.S.C. 231 and which are not deductible under

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1 subdivision (1).2 (10) (8) Subtract an amount equal to the amount of federal Social3 Security and Railroad Retirement benefits included in a taxpayer's4 federal gross income by Section 86 of the Internal Revenue Code.5 (11) (9) In the case of a nonresident taxpayer or a resident6 taxpayer residing in Indiana for a period of less than the taxpayer's7 entire taxable year, the total amount of the deductions allowed8 pursuant to subdivisions (3), (4), and (5) and (6) shall be reduced9 to an amount which bears the same ratio to the total as the

10 taxpayer's income taxable in Indiana bears to the taxpayer's total11 income.12 (12) (10) In the case of an individual who is a recipient of13 assistance under IC 12-10-6-1, IC 12-10-6-2.1, IC 12-15-2-2, or14 IC 12-15-7, subtract an amount equal to that portion of the15 individual's adjusted gross income with respect to which the16 individual is not allowed under federal law to retain an amount to17 pay state and local income taxes.18 (13) (11) In the case of an eligible individual, subtract the amount19 of a Holocaust victim's settlement payment included in the20 individual's federal adjusted gross income.21 (14) (12) Subtract an amount equal to the portion of any22 premiums paid during the taxable year by the taxpayer for a23 qualified long term care policy (as defined in IC 12-15-39.6-5) for24 the taxpayer or the taxpayer's spouse, or both.25 (15) (13) Subtract an amount equal to the lesser of:26 (A) two thousand five hundred dollars ($2,500); or27 (B) the amount of property taxes that are paid during the28 taxable year in Indiana by the individual on the individual's29 principal place of residence.30 (16) (14) Subtract an amount equal to the amount of a September31 11 terrorist attack settlement payment included in the individual's32 federal adjusted gross income.33 (17) (15) Add or subtract the amount necessary to make the34 adjusted gross income of any taxpayer that owns property for35 which bonus depreciation was allowed in the current taxable year36 or in an earlier taxable year equal to the amount of adjusted gross37 income that would have been computed had an election not been38 made under Section 168(k) of the Internal Revenue Code to apply39 bonus depreciation to the property in the year that it was placed40 in service.41 (18) (16) Add an amount equal to any deduction allowed under42 Section 172 of the Internal Revenue Code.

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1 (19) (17) Add or subtract the amount necessary to make the2 adjusted gross income of any taxpayer that placed Section 1793 property (as defined in Section 179 of the Internal Revenue Code)4 in service in the current taxable year or in an earlier taxable year5 equal to the amount of adjusted gross income that would have6 been computed had an election for federal income tax purposes7 not been made for the year in which the property was placed in8 service to take deductions under Section 179 of the Internal9 Revenue Code in a total amount exceeding twenty-five thousand

10 dollars ($25,000).11 (20) (18) Add an amount equal to the amount that a taxpayer12 claimed as a deduction for domestic production activities for the13 taxable year under Section 199 of the Internal Revenue Code for14 federal income tax purposes.15 (21) (19) Subtract an amount equal to the amount of the taxpayer's16 qualified military income that was not excluded from the17 taxpayer's gross income for federal income tax purposes under18 Section 112 of the Internal Revenue Code.19 (22) (20) Subtract income that is:20 (A) exempt from taxation under IC 6-3-2-21.7; and21 (B) included in the individual's federal adjusted gross income22 under the Internal Revenue Code.23 (23) Subtract any amount of a credit (including an advance refund24 of the credit) that is provided to an individual under 26 U.S.C.25 6428 (federal Economic Stimulus Act of 2008) and included in26 the individual's federal adjusted gross income.27 (24) Add any amount of unemployment compensation excluded28 from federal gross income, as defined in Section 61 of the Internal29 Revenue Code, under Section 85(c) of the Internal Revenue Code.30 (25) Add the amount excluded from gross income under Section31 108(a)(1)(e) of the Internal Revenue Code for the discharge of32 debt on a qualified principal residence.33 (26) (21) Add an amount equal to any income not included in34 gross income as a result of the deferral of income arising from35 business indebtedness discharged in connection with the36 reacquisition after December 31, 2008, and before January 1,37 2011, of an applicable debt instrument, as provided in Section38 108(i) of the Internal Revenue Code. Subtract the amount39 necessary from the adjusted gross income of any taxpayer that40 added an amount to adjusted gross income in a previous year to41 offset the amount included in federal gross income as a result of42 the deferral of income arising from business indebtedness

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1 discharged in connection with the reacquisition after December2 31, 2008, and before January 1, 2011, of an applicable debt3 instrument, as provided in Section 108(i) of the Internal Revenue4 Code.5 (27) Add or subtract the amount necessary to make the adjusted6 gross income of any taxpayer that claimed the special allowance7 for qualified disaster assistance property under Section 168(n) of8 the Internal Revenue Code equal to the amount of adjusted gross9 income that would have been computed had the special allowance

10 not been claimed for the property.11 (28) Add or subtract the amount necessary to make the adjusted12 gross income of any taxpayer that made an election under Section13 179C of the Internal Revenue Code to expense costs for qualified14 refinery property equal to the amount of adjusted gross income15 that would have been computed had an election for federal16 income tax purposes not been made for the year.17 (29) Add or subtract the amount necessary to make the adjusted18 gross income of any taxpayer that made an election under Section19 181 of the Internal Revenue Code to expense costs for a qualified20 film or television production equal to the amount of adjusted21 gross income that would have been computed had an election for22 federal income tax purposes not been made for the year.23 (30) Add or subtract the amount necessary to make the adjusted24 gross income of any taxpayer that treated a loss from the sale or25 exchange of preferred stock in:26 (A) the Federal National Mortgage Association, established27 under the Federal National Mortgage Association Charter Act28 (12 U.S.C. 1716 et seq.); or29 (B) the Federal Home Loan Mortgage Corporation, established30 under the Federal Home Loan Mortgage Corporation Act (1231 U.S.C. 1451 et seq.);32 as an ordinary loss under Section 301 of the Emergency33 Economic Stabilization Act of 2008 in the current taxable year or34 in an earlier taxable year equal to the amount of adjusted gross35 income that would have been computed had the loss not been36 treated as an ordinary loss.37 (31) (22) Add the amount excluded from federal gross income38 under Section 103 of the Internal Revenue Code for interest39 received on an obligation of a state other than Indiana, or a40 political subdivision of such a state, that is acquired by the41 taxpayer after December 31, 2011.42 (32) This subdivision does not apply to payments made for

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1 services provided to a business that was enrolled and participated2 in the E-Verify program (as defined in IC 22-5-1.7-3) during the3 time the taxpayer conducted business in Indiana in the taxable4 year. For a taxable year beginning after June 30, 2011, add the5 amount of any trade or business deduction allowed under the6 Internal Revenue Code for wages, reimbursements, or other7 payments made for services provided in Indiana by an individual8 for services as an employee, if the individual was, during the9 period of service, prohibited from being hired as an employee

10 under 8 U.S.C. 1324a.11 (b) In the case of corporations, the same as "taxable income" (as12 defined in Section 63 of the Internal Revenue Code) adjusted as13 follows:14 (1) Subtract income that is exempt from taxation under this article15 by the Constitution and statutes of the United States.16 (2) Add an amount equal to any deduction or deductions allowed17 or allowable pursuant to Section 170 of the Internal Revenue18 Code.19 (3) Add an amount equal to any deduction or deductions allowed20 or allowable pursuant to Section 63 of the Internal Revenue Code21 for taxes based on or measured by income and levied at the state22 level by any state of the United States.23 (4) Subtract an amount equal to the amount included in the24 corporation's taxable income under Section 78 of the Internal25 Revenue Code.26 (5) Add or subtract the amount necessary to make the adjusted27 gross income of any taxpayer that owns property for which bonus28 depreciation was allowed in the current taxable year or in an29 earlier taxable year equal to the amount of adjusted gross income30 that would have been computed had an election not been made31 under Section 168(k) of the Internal Revenue Code to apply bonus32 depreciation to the property in the year that it was placed in33 service.34 (6) Add an amount equal to any deduction allowed under Section35 172 of the Internal Revenue Code.36 (7) Add or subtract the amount necessary to make the adjusted37 gross income of any taxpayer that placed Section 179 property (as38 defined in Section 179 of the Internal Revenue Code) in service39 in the current taxable year or in an earlier taxable year equal to40 the amount of adjusted gross income that would have been41 computed had an election for federal income tax purposes not42 been made for the year in which the property was placed in

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1 service to take deductions under Section 179 of the Internal2 Revenue Code in a total amount exceeding twenty-five thousand3 dollars ($25,000).4 (8) Add an amount equal to the amount that a taxpayer claimed as5 a deduction for domestic production activities for the taxable year6 under Section 199 of the Internal Revenue Code for federal7 income tax purposes.8 (9) Add to the extent required by IC 6-3-2-20 the amount of9 intangible expenses (as defined in IC 6-3-2-20) and any directly

10 related intangible interest expenses (as defined in IC 6-3-2-20) for11 the taxable year that reduced the corporation's taxable income (as12 defined in Section 63 of the Internal Revenue Code) for federal13 income tax purposes.14 (10) Add an amount equal to any deduction for dividends paid (as15 defined in Section 561 of the Internal Revenue Code) to16 shareholders of a captive real estate investment trust (as defined17 in section 34.5 of this chapter).18 (11) Subtract income that is:19 (A) exempt from taxation under IC 6-3-2-21.7; and20 (B) included in the corporation's taxable income under the21 Internal Revenue Code.22 (12) Add an amount equal to any income not included in gross23 income as a result of the deferral of income arising from business24 indebtedness discharged in connection with the reacquisition after25 December 31, 2008, and before January 1, 2011, of an applicable26 debt instrument, as provided in Section 108(i) of the Internal27 Revenue Code. Subtract from the adjusted gross income of any28 taxpayer that added an amount to adjusted gross income in a29 previous year the amount necessary to offset the amount included30 in federal gross income as a result of the deferral of income31 arising from business indebtedness discharged in connection with32 the reacquisition after December 31, 2008, and before January 1,33 2011, of an applicable debt instrument, as provided in Section34 108(i) of the Internal Revenue Code.35 (13) Add or subtract the amount necessary to make the adjusted36 gross income of any taxpayer that claimed the special allowance37 for qualified disaster assistance property under Section 168(n) of38 the Internal Revenue Code equal to the amount of adjusted gross39 income that would have been computed had the special allowance40 not been claimed for the property.41 (14) Add or subtract the amount necessary to make the adjusted42 gross income of any taxpayer that made an election under Section

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1 179C of the Internal Revenue Code to expense costs for qualified2 refinery property equal to the amount of adjusted gross income3 that would have been computed had an election for federal4 income tax purposes not been made for the year.5 (15) Add or subtract the amount necessary to make the adjusted6 gross income of any taxpayer that made an election under Section7 181 of the Internal Revenue Code to expense costs for a qualified8 film or television production equal to the amount of adjusted9 gross income that would have been computed had an election for

10 federal income tax purposes not been made for the year.11 (16) Add or subtract the amount necessary to make the adjusted12 gross income of any taxpayer that treated a loss from the sale or13 exchange of preferred stock in:14 (A) the Federal National Mortgage Association, established15 under the Federal National Mortgage Association Charter Act16 (12 U.S.C. 1716 et seq.); or17 (B) the Federal Home Loan Mortgage Corporation, established18 under the Federal Home Loan Mortgage Corporation Act (1219 U.S.C. 1451 et seq.);20 as an ordinary loss under Section 301 of the Emergency21 Economic Stabilization Act of 2008 in the current taxable year or22 in an earlier taxable year equal to the amount of adjusted gross23 income that would have been computed had the loss not been24 treated as an ordinary loss.25 (17) This subdivision does not apply to payments made for26 services provided to a business that was enrolled and participated27 in the E-Verify program (as defined in IC 22-5-1.7-3) during the28 time the taxpayer conducted business in Indiana in the taxable29 year. For a taxable year beginning after June 30, 2011, add the30 amount of any trade or business deduction allowed under the31 Internal Revenue Code for wages, reimbursements, or other32 payments made for services provided in Indiana by an individual33 for services as an employee, if the individual was, during the34 period of service, prohibited from being hired as an employee35 under 8 U.S.C. 1324a.36 (18) (13) Add the amount excluded from federal gross income37 under Section 103 of the Internal Revenue Code for interest38 received on an obligation of a state other than Indiana, or a39 political subdivision of such a state, that is acquired by the40 taxpayer after December 31, 2011.41 (c) In the case of life insurance companies (as defined in Section42 816(a) of the Internal Revenue Code) that are organized under Indiana

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1 law, the same as "life insurance company taxable income" (as defined2 in Section 801 of the Internal Revenue Code), adjusted as follows:3 (1) Subtract income that is exempt from taxation under this article4 by the Constitution and statutes of the United States.5 (2) Add an amount equal to any deduction allowed or allowable6 under Section 170 of the Internal Revenue Code.7 (3) Add an amount equal to a deduction allowed or allowable8 under Section 805 or Section 831(c) of the Internal Revenue Code9 for taxes based on or measured by income and levied at the state

10 level by any state.11 (4) Subtract an amount equal to the amount included in the12 company's taxable income under Section 78 of the Internal13 Revenue Code.14 (5) Add or subtract the amount necessary to make the adjusted15 gross income of any taxpayer that owns property for which bonus16 depreciation was allowed in the current taxable year or in an17 earlier taxable year equal to the amount of adjusted gross income18 that would have been computed had an election not been made19 under Section 168(k) of the Internal Revenue Code to apply bonus20 depreciation to the property in the year that it was placed in21 service.22 (6) Add an amount equal to any deduction allowed under Section23 172 or Section 810 of the Internal Revenue Code.24 (7) Add or subtract the amount necessary to make the adjusted25 gross income of any taxpayer that placed Section 179 property (as26 defined in Section 179 of the Internal Revenue Code) in service27 in the current taxable year or in an earlier taxable year equal to28 the amount of adjusted gross income that would have been29 computed had an election for federal income tax purposes not30 been made for the year in which the property was placed in31 service to take deductions under Section 179 of the Internal32 Revenue Code in a total amount exceeding twenty-five thousand33 dollars ($25,000).34 (8) Add an amount equal to the amount that a taxpayer claimed as35 a deduction for domestic production activities for the taxable year36 under Section 199 of the Internal Revenue Code for federal37 income tax purposes.38 (9) Subtract income that is:39 (A) exempt from taxation under IC 6-3-2-21.7; and40 (B) included in the insurance company's taxable income under41 the Internal Revenue Code.42 (10) Add an amount equal to any income not included in gross

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1 income as a result of the deferral of income arising from business2 indebtedness discharged in connection with the reacquisition after3 December 31, 2008, and before January 1, 2011, of an applicable4 debt instrument, as provided in Section 108(i) of the Internal5 Revenue Code. Subtract from the adjusted gross income of any6 taxpayer that added an amount to adjusted gross income in a7 previous year the amount necessary to offset the amount included8 in federal gross income as a result of the deferral of income9 arising from business indebtedness discharged in connection with

10 the reacquisition after December 31, 2008, and before January 1,11 2011, of an applicable debt instrument, as provided in Section12 108(i) of the Internal Revenue Code.13 (11) Add or subtract the amount necessary to make the adjusted14 gross income of any taxpayer that claimed the special allowance15 for qualified disaster assistance property under Section 168(n) of16 the Internal Revenue Code equal to the amount of adjusted gross17 income that would have been computed had the special allowance18 not been claimed for the property.19 (12) Add or subtract the amount necessary to make the adjusted20 gross income of any taxpayer that made an election under Section21 179C of the Internal Revenue Code to expense costs for qualified22 refinery property equal to the amount of adjusted gross income23 that would have been computed had an election for federal24 income tax purposes not been made for the year.25 (13) Add or subtract the amount necessary to make the adjusted26 gross income of any taxpayer that made an election under Section27 181 of the Internal Revenue Code to expense costs for a qualified28 film or television production equal to the amount of adjusted29 gross income that would have been computed had an election for30 federal income tax purposes not been made for the year.31 (14) Add or subtract the amount necessary to make the adjusted32 gross income of any taxpayer that treated a loss from the sale or33 exchange of preferred stock in:34 (A) the Federal National Mortgage Association, established35 under the Federal National Mortgage Association Charter Act36 (12 U.S.C. 1716 et seq.); or37 (B) the Federal Home Loan Mortgage Corporation, established38 under the Federal Home Loan Mortgage Corporation Act (1239 U.S.C. 1451 et seq.);40 as an ordinary loss under Section 301 of the Emergency41 Economic Stabilization Act of 2008 in the current taxable year or42 in an earlier taxable year equal to the amount of adjusted gross

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1 income that would have been computed had the loss not been2 treated as an ordinary loss.3 (15) (11) Add an amount equal to any exempt insurance income4 under Section 953(e) of the Internal Revenue Code that is active5 financing income under Subpart F of Subtitle A, Chapter 1,6 Subchapter N of the Internal Revenue Code.7 (16) This subdivision does not apply to payments made for8 services provided to a business that was enrolled and participated9 in the E-Verify program (as defined in IC 22-5-1.7-3) during the

10 time the taxpayer conducted business in Indiana in the taxable11 year. For a taxable year beginning after June 30, 2011, add the12 amount of any trade or business deduction allowed under the13 Internal Revenue Code for wages, reimbursements, or other14 payments made for services provided in Indiana by an individual15 for services as an employee, if the individual was, during the16 period of service, prohibited from being hired as an employee17 under 8 U.S.C. 1324a.18 (17) (12) Add the amount excluded from federal gross income19 under Section 103 of the Internal Revenue Code for interest20 received on an obligation of a state other than Indiana, or a21 political subdivision of such a state, that is acquired by the22 taxpayer after December 31, 2011.23 (d) In the case of insurance companies subject to tax under Section24 831 of the Internal Revenue Code and organized under Indiana law, the25 same as "taxable income" (as defined in Section 832 of the Internal26 Revenue Code), adjusted as follows:27 (1) Subtract income that is exempt from taxation under this article28 by the Constitution and statutes of the United States.29 (2) Add an amount equal to any deduction allowed or allowable30 under Section 170 of the Internal Revenue Code.31 (3) Add an amount equal to a deduction allowed or allowable32 under Section 805 or Section 831(c) of the Internal Revenue Code33 for taxes based on or measured by income and levied at the state34 level by any state.35 (4) Subtract an amount equal to the amount included in the36 company's taxable income under Section 78 of the Internal37 Revenue Code.38 (5) Add or subtract the amount necessary to make the adjusted39 gross income of any taxpayer that owns property for which bonus40 depreciation was allowed in the current taxable year or in an41 earlier taxable year equal to the amount of adjusted gross income42 that would have been computed had an election not been made

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1 under Section 168(k) of the Internal Revenue Code to apply bonus2 depreciation to the property in the year that it was placed in3 service.4 (6) Add an amount equal to any deduction allowed under Section5 172 of the Internal Revenue Code.6 (7) Add or subtract the amount necessary to make the adjusted7 gross income of any taxpayer that placed Section 179 property (as8 defined in Section 179 of the Internal Revenue Code) in service9 in the current taxable year or in an earlier taxable year equal to

10 the amount of adjusted gross income that would have been11 computed had an election for federal income tax purposes not12 been made for the year in which the property was placed in13 service to take deductions under Section 179 of the Internal14 Revenue Code in a total amount exceeding twenty-five thousand15 dollars ($25,000).16 (8) Add an amount equal to the amount that a taxpayer claimed as17 a deduction for domestic production activities for the taxable year18 under Section 199 of the Internal Revenue Code for federal19 income tax purposes.20 (9) Subtract income that is:21 (A) exempt from taxation under IC 6-3-2-21.7; and22 (B) included in the insurance company's taxable income under23 the Internal Revenue Code.24 (10) Add an amount equal to any income not included in gross25 income as a result of the deferral of income arising from business26 indebtedness discharged in connection with the reacquisition after27 December 31, 2008, and before January 1, 2011, of an applicable28 debt instrument, as provided in Section 108(i) of the Internal29 Revenue Code. Subtract from the adjusted gross income of any30 taxpayer that added an amount to adjusted gross income in a31 previous year the amount necessary to offset the amount included32 in federal gross income as a result of the deferral of income33 arising from business indebtedness discharged in connection with34 the reacquisition after December 31, 2008, and before January 1,35 2011, of an applicable debt instrument, as provided in Section36 108(i) of the Internal Revenue Code.37 (11) Add or subtract the amount necessary to make the adjusted38 gross income of any taxpayer that claimed the special allowance39 for qualified disaster assistance property under Section 168(n) of40 the Internal Revenue Code equal to the amount of adjusted gross41 income that would have been computed had the special allowance42 not been claimed for the property.

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1 (12) Add or subtract the amount necessary to make the adjusted2 gross income of any taxpayer that made an election under Section3 179C of the Internal Revenue Code to expense costs for qualified4 refinery property equal to the amount of adjusted gross income5 that would have been computed had an election for federal6 income tax purposes not been made for the year.7 (13) Add or subtract the amount necessary to make the adjusted8 gross income of any taxpayer that made an election under Section9 181 of the Internal Revenue Code to expense costs for a qualified

10 film or television production equal to the amount of adjusted11 gross income that would have been computed had an election for12 federal income tax purposes not been made for the year.13 (14) Add or subtract the amount necessary to make the adjusted14 gross income of any taxpayer that treated a loss from the sale or15 exchange of preferred stock in:16 (A) the Federal National Mortgage Association, established17 under the Federal National Mortgage Association Charter Act18 (12 U.S.C. 1716 et seq.); or19 (B) the Federal Home Loan Mortgage Corporation, established20 under the Federal Home Loan Mortgage Corporation Act (1221 U.S.C. 1451 et seq.);22 as an ordinary loss under Section 301 of the Emergency23 Economic Stabilization Act of 2008 in the current taxable year or24 in an earlier taxable year equal to the amount of adjusted gross25 income that would have been computed had the loss not been26 treated as an ordinary loss.27 (15) (11) Add an amount equal to any exempt insurance income28 under Section 953(e) of the Internal Revenue Code that is active29 financing income under Subpart F of Subtitle A, Chapter 1,30 Subchapter N of the Internal Revenue Code.31 (16) This subdivision does not apply to payments made for32 services provided to a business that was enrolled and participated33 in the E-Verify program (as defined in IC 22-5-1.7-3) during the34 time the taxpayer conducted business in Indiana in the taxable35 year. For a taxable year beginning after June 30, 2011, add the36 amount of any trade or business deduction allowed under the37 Internal Revenue Code for wages, reimbursements, or other38 payments made for services provided in Indiana by an individual39 for services as an employee, if the individual was, during the40 period of service, prohibited from being hired as an employee41 under 8 U.S.C. 1324a.42 (17) (12) Add the amount excluded from federal gross income

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1 under Section 103 of the Internal Revenue Code for interest2 received on an obligation of a state other than Indiana, or a3 political subdivision of such a state, that is acquired by the4 taxpayer after December 31, 2011.5 (e) In the case of trusts and estates, "taxable income" (as defined for6 trusts and estates in Section 641(b) of the Internal Revenue Code)7 adjusted as follows:8 (1) Subtract income that is exempt from taxation under this article9 by the Constitution and statutes of the United States.

10 (2) Subtract an amount equal to the amount of a September 1111 terrorist attack settlement payment included in the federal12 adjusted gross income of the estate of a victim of the September13 11 terrorist attack or a trust to the extent the trust benefits a victim14 of the September 11 terrorist attack.15 (3) Add or subtract the amount necessary to make the adjusted16 gross income of any taxpayer that owns property for which bonus17 depreciation was allowed in the current taxable year or in an18 earlier taxable year equal to the amount of adjusted gross income19 that would have been computed had an election not been made20 under Section 168(k) of the Internal Revenue Code to apply bonus21 depreciation to the property in the year that it was placed in22 service.23 (4) Add an amount equal to any deduction allowed under Section24 172 of the Internal Revenue Code.25 (5) Add or subtract the amount necessary to make the adjusted26 gross income of any taxpayer that placed Section 179 property (as27 defined in Section 179 of the Internal Revenue Code) in service28 in the current taxable year or in an earlier taxable year equal to29 the amount of adjusted gross income that would have been30 computed had an election for federal income tax purposes not31 been made for the year in which the property was placed in32 service to take deductions under Section 179 of the Internal33 Revenue Code in a total amount exceeding twenty-five thousand34 dollars ($25,000).35 (6) Add an amount equal to the amount that a taxpayer claimed as36 a deduction for domestic production activities for the taxable year37 under Section 199 of the Internal Revenue Code for federal38 income tax purposes.39 (7) Subtract income that is:40 (A) exempt from taxation under IC 6-3-2-21.7; and41 (B) included in the taxpayer's taxable income under the42 Internal Revenue Code.

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1 (8) Add an amount equal to any income not included in gross2 income as a result of the deferral of income arising from business3 indebtedness discharged in connection with the reacquisition after4 December 31, 2008, and before January 1, 2011, of an applicable5 debt instrument, as provided in Section 108(i) of the Internal6 Revenue Code. Subtract from the adjusted gross income of any7 taxpayer that added an amount to adjusted gross income in a8 previous year the amount necessary to offset the amount included9 in federal gross income as a result of the deferral of income

10 arising from business indebtedness discharged in connection with11 the reacquisition after December 31, 2008, and before January 1,12 2011, of an applicable debt instrument, as provided in Section13 108(i) of the Internal Revenue Code.14 (9) Add or subtract the amount necessary to make the adjusted15 gross income of any taxpayer that claimed the special allowance16 for qualified disaster assistance property under Section 168(n) of17 the Internal Revenue Code equal to the amount of adjusted gross18 income that would have been computed had the special allowance19 not been claimed for the property.20 (10) Add or subtract the amount necessary to make the adjusted21 gross income of any taxpayer that made an election under Section22 179C of the Internal Revenue Code to expense costs for qualified23 refinery property equal to the amount of adjusted gross income24 that would have been computed had an election for federal25 income tax purposes not been made for the year.26 (11) Add or subtract the amount necessary to make the adjusted27 gross income of any taxpayer that made an election under Section28 181 of the Internal Revenue Code to expense costs for a qualified29 film or television production equal to the amount of adjusted30 gross income that would have been computed had an election for31 federal income tax purposes not been made for the year.32 (12) Add or subtract the amount necessary to make the adjusted33 gross income of any taxpayer that treated a loss from the sale or34 exchange of preferred stock in:35 (A) the Federal National Mortgage Association, established36 under the Federal National Mortgage Association Charter Act37 (12 U.S.C. 1716 et seq.); or38 (B) the Federal Home Loan Mortgage Corporation, established39 under the Federal Home Loan Mortgage Corporation Act (1240 U.S.C. 1451 et seq.);41 as an ordinary loss under Section 301 of the Emergency42 Economic Stabilization Act of 2008 in the current taxable year or

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1 in an earlier taxable year equal to the amount of adjusted gross2 income that would have been computed had the loss not been3 treated as an ordinary loss.4 (13) Add the amount excluded from gross income under Section5 108(a)(1)(e) of the Internal Revenue Code for the discharge of6 debt on a qualified principal residence.7 (14) This subdivision does not apply to payments made for8 services provided to a business that was enrolled and participated9 in the E-Verify program (as defined in IC 22-5-1.7-3) during the

10 time the taxpayer conducted business in Indiana in the taxable11 year. For a taxable year beginning after June 30, 2011, add the12 amount of any trade or business deduction allowed under the13 Internal Revenue Code for wages, reimbursements, or other14 payments made for services provided in Indiana by an individual15 for services as an employee, if the individual was, during the16 period of service, prohibited from being hired as an employee17 under 8 U.S.C. 1324a.18 (15) (9) Add the amount excluded from federal gross income19 under Section 103 of the Internal Revenue Code for interest20 received on an obligation of a state other than Indiana, or a21 political subdivision of such a state, that is acquired by the22 taxpayer after December 31, 2011.23 (f) For purposes of this section, if a taxpayer:24 (1) claimed the special allowance for qualified disaster25 assistance property under Section 168(n) of the Internal26 Revenue Code;27 (2) made an election under Section 179C of the Internal28 Revenue Code to expense costs for qualified refinery property29 equal to the amount of adjusted gross income that would have30 been computed had an election for federal income tax31 purposes not been made for the year;32 (3) made an election under Section 181 of the Internal33 Revenue Code to expense costs for a qualified film or34 television production equal to the amount of adjusted gross35 income that would have been computed had an election for36 federal income tax purposes not been made for the year; or37 (4) treated a loss from the sale or exchange of preferred stock38 in:39 (A) the Federal National Mortgage Association, established40 under the Federal National Mortgage Association Charter41 Act (12 U.S.C. 1716 et seq.); or42 (B) the Federal Home Loan Mortgage Corporation,

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1 established under the Federal Home Loan Mortgage2 Corporation Act (12 U.S.C. 1451 et seq.);3 as an ordinary loss under Section 301 of the Emergency4 Economic Stabilization Act of 2008 for any taxable year5 beginning before January 1, 2015;6 the taxpayer shall continue to add or subtract the amounts7 required under this section for the taxable years beginning after8 December 31, 2014, as provided in this section as in effect on9 December 31, 2014. However, any amount otherwise allowable as

10 a deduction but not deducted in a taxable year beginning before11 January 1, 2020, shall be deducted in the taxpayer's first taxable12 year beginning after December 31, 2019.13 SECTION 2. IC 6-3-1-20 IS AMENDED TO READ AS FOLLOWS14 [EFFECTIVE JANUARY 1, 2016]: Sec. 20. The term "business15 income" means all income arising from transactions and activity in the16 regular course of the taxpayer's trade or business and includes income17 from tangible and intangible property if the acquisition, management,18 and disposition of the property constitutes integral parts of the19 taxpayer's regular trade or business operations. that is apportionable20 under the Constitution of the United States.21 SECTION 3. IC 6-3-2-2, AS AMENDED BY P.L.233-2013,22 SECTION 7, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE23 JANUARY 1, 2016]: Sec. 2. (a) With regard to corporations and24 nonresident persons, "adjusted gross income derived from sources25 within Indiana", for the purposes of this article, shall mean and include:26 (1) income from real or tangible personal property located in this27 state;28 (2) income from doing business in this state;29 (3) income from a trade or profession conducted in this state;30 (4) compensation for labor or services rendered within this state;31 and32 (5) income from stocks, bonds, notes, bank deposits, patents,33 copyrights, secret processes and formulas, good will, trademarks,34 trade brands, franchises, and other intangible personal property to35 the extent that the income is apportioned to Indiana under this36 section or if the income is allocated to Indiana or considered to be37 derived from sources within Indiana under this section.38 Income from a pass through entity shall be characterized in a manner39 consistent with the income's characterization for federal income tax40 purposes and shall be considered Indiana source income as if the41 person, corporation, or pass through entity that received the income had42 directly engaged in the income producing activity. Income that is

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1 derived from one (1) pass through entity and is considered to pass2 through to another pass through entity does not change these3 characteristics or attribution provisions. In the case of nonbusiness4 income described in subsection (g), only so much of such income as is5 allocated to this state under the provisions of subsections (h) through6 (k) shall be deemed to be derived from sources within Indiana. In the7 case of business income, only so much of such income as is8 apportioned to this state under the provision of subsection (b) shall be9 deemed to be derived from sources within the state of Indiana. In the

10 case of compensation of a team member (as defined in section 2.7 of11 this chapter), only the portion of income determined to be Indiana12 income under section 2.7 of this chapter is considered derived from13 sources within Indiana. In the case of a corporation that is a life14 insurance company (as defined in Section 816(a) of the Internal15 Revenue Code) or an insurance company that is subject to tax under16 Section 831 of the Internal Revenue Code, only so much of the income17 as is apportioned to Indiana under subsection (r) is considered derived18 from sources within Indiana.19 (b) Except as provided in subsection (l), if business income of a20 corporation or a nonresident person is derived from sources within the21 state of Indiana and from sources without the state of Indiana, the22 business income derived from sources within this state shall be23 determined by multiplying the business income derived from sources24 both within and without the state of Indiana by the following:25 (1) For all taxable years that begin after December 31, 2006, and26 before January 1, 2008, a fraction. The:27 (A) numerator of the fraction is the sum of the property factor28 plus the payroll factor plus the product of the sales factor29 multiplied by three (3); and30 (B) denominator of the fraction is five (5).31 (2) For all taxable years that begin after December 31, 2007, and32 before January 1, 2009, a fraction. The:33 (A) numerator of the fraction is the property factor plus the34 payroll factor plus the product of the sales factor multiplied by35 four and sixty-seven hundredths (4.67); and36 (B) denominator of the fraction is six and sixty-seven37 hundredths (6.67).38 (3) For all taxable years beginning after December 31, 2008, and39 before January 1, 2010, a fraction. The:40 (A) numerator of the fraction is the property factor plus the41 payroll factor plus the product of the sales factor multiplied by42 eight (8); and

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1 (B) denominator of the fraction is ten (10).2 (4) For all taxable years beginning after December 31, 2009, and3 before January 1, 2011, a fraction. The:4 (A) numerator of the fraction is the property factor plus the5 payroll factor plus the product of the sales factor multiplied by6 eighteen (18); and7 (B) denominator of the fraction is twenty (20).8 (5) For all taxable years beginning after December 31, 2010, the9 sales factor.

10 (c) The property factor is a fraction, the numerator of which is the11 average value of the taxpayer's real and tangible personal property12 owned or rented and used in this state during the taxable year and the13 denominator of which is the average value of all the taxpayer's real and14 tangible personal property owned or rented and used during the taxable15 year. However, with respect to a foreign corporation, the denominator16 does not include the average value of real or tangible personal property17 owned or rented and used in a place that is outside the United States.18 Property owned by the taxpayer is valued at its original cost. Property19 rented by the taxpayer is valued at eight (8) times the net annual rental20 rate. Net annual rental rate is the annual rental rate paid by the taxpayer21 less any annual rental rate received by the taxpayer from subrentals.22 The average of property shall be determined by averaging the values at23 the beginning and ending of the taxable year, but the department may24 require the averaging of monthly values during the taxable year if25 reasonably required to reflect properly the average value of the26 taxpayer's property.27 (d) The payroll factor is a fraction, the numerator of which is the28 total amount paid in this state during the taxable year by the taxpayer29 for compensation, and the denominator of which is the total30 compensation paid everywhere during the taxable year. However, with31 respect to a foreign corporation, the denominator does not include32 compensation paid in a place that is outside the United States.33 Compensation is paid in this state if:34 (1) the individual's service is performed entirely within the state;35 (2) the individual's service is performed both within and without36 this state, but the service performed without this state is incidental37 to the individual's service within this state; or38 (3) some of the service is performed in this state and:39 (A) the base of operations or, if there is no base of operations,40 the place from which the service is directed or controlled is in41 this state; or42 (B) the base of operations or the place from which the service

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1 is directed or controlled is not in any state in which some part2 of the service is performed, but the individual is a resident of3 this state.4 (e) The sales factor is a fraction, the numerator of which is the total5 sales of the taxpayer in this state during the taxable year, and the6 denominator of which is the total sales of the taxpayer everywhere7 during the taxable year. Sales include receipts from intangible property8 and receipts from the sale or exchange of intangible property. However,9 with respect to a foreign corporation, the denominator does not include

10 sales made in a place that is outside the United States. Receipts from11 intangible personal property are derived from sources within Indiana12 if the receipts from the intangible personal property are attributable to13 Indiana under section 2.2 of this chapter. Regardless of the f.o.b. point14 or other conditions of the sale, sales of tangible personal property are15 in this state if:16 (1) the property is delivered or shipped to a purchaser that is17 within Indiana, other than the United States government; or18 (2) the property is shipped from an office, a store, a warehouse, a19 factory, or other place of storage in this state and20 (A) the purchaser is the United States government. or21 (B) the taxpayer is not taxable in the state of the purchaser.22 Gross receipts derived from commercial printing as described in23 IC 6-2.5-1-10 and from the sale of computer software shall be24 treated as sales of tangible personal property for purposes of this25 chapter.26 (f) Sales, other than receipts from intangible property covered by27 subsection (e) and sales of tangible personal property, are in this state28 if:29 (1) the income-producing activity is performed in this state; or30 (2) the income-producing activity is performed both within and31 without this state and a greater proportion of the32 income-producing activity is performed in this state than in any33 other state, based on costs of performance.34 (g) Rents and royalties from real or tangible personal property,35 capital gains, interest, dividends, or patent or copyright royalties, to the36 extent that they constitute nonbusiness income, shall be allocated as37 provided in subsections (h) through (k).38 (h)(1) Net rents and royalties from real property located in this state39 are allocable to this state.40 (2) Net rents and royalties from tangible personal property are41 allocated to this state:42 (i) if and to the extent that the property is utilized in this state; or

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1 (ii) in their entirety if the taxpayer's commercial domicile is in this2 state and the taxpayer is not organized under the laws of or3 taxable in the state in which the property is utilized.4 (3) The extent of utilization of tangible personal property in a state5 is determined by multiplying the rents and royalties by a fraction, the6 numerator of which is the number of days of physical location of the7 property in the state during the rental or royalty period in the taxable8 year, and the denominator of which is the number of days of physical9 location of the property everywhere during all rental or royalty periods

10 in the taxable year. If the physical location of the property during the11 rental or royalty period is unknown or unascertainable by the taxpayer,12 tangible personal property is utilized in the state in which the property13 was located at the time the rental or royalty payer obtained possession.14 (i)(1) Capital gains and losses from sales of real property located in15 this state are allocable to this state.16 (2) Capital gains and losses from sales of tangible personal property17 are allocable to this state if:18 (i) the property had a situs in this state at the time of the sale; or19 (ii) the taxpayer's commercial domicile is in this state and the20 taxpayer is not taxable in the state in which the property had a21 situs.22 (3) Capital gains and losses from sales of intangible personal23 property are allocable to this state if the taxpayer's commercial24 domicile is in this state.25 (j) Interest and dividends are allocable to this state if the taxpayer's26 commercial domicile is in this state.27 (k)(1) Patent and copyright royalties are allocable to this state:28 (i) if and to the extent that the patent or copyright is utilized by29 the taxpayer in this state; or30 (ii) if and to the extent that the patent or copyright is utilized by31 the taxpayer in a state in which the taxpayer is not taxable and the32 taxpayer's commercial domicile is in this state.33 (2) A patent is utilized in a state to the extent that it is employed34 in production, fabrication, manufacturing, or other processing in35 the state or to the extent that a patented product is produced in the36 state. If the basis of receipts from patent royalties does not permit37 allocation to states or if the accounting procedures do not reflect38 states of utilization, the patent is utilized in the state in which the39 taxpayer's commercial domicile is located.40 (3) A copyright is utilized in a state to the extent that printing or41 other publication originates in the state. If the basis of receipts42 from copyright royalties does not permit allocation to states or if

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1 the accounting procedures do not reflect states of utilization, the2 copyright is utilized in the state in which the taxpayer's3 commercial domicile is located.4 (l) If the allocation and apportionment provisions of this article do5 not fairly represent the taxpayer's income derived from sources within6 the state of Indiana, the taxpayer may petition for or the department7 may require, in respect to all or any part of the taxpayer's business8 activity, if reasonable:9 (1) separate accounting;

10 (2) for a taxable year beginning before January 1, 2011, the11 exclusion of any one (1) or more of the factors, except the sales12 factor;13 (3) the inclusion of one (1) or more additional factors which will14 fairly represent the taxpayer's income derived from sources within15 the state of Indiana; or16 (4) the employment of any other method to effectuate an equitable17 allocation and apportionment of the taxpayer's income.18 (m) In the case of two (2) or more organizations, trades, or19 businesses owned or controlled directly or indirectly by the same20 interests, the department shall distribute, apportion, or allocate the21 income derived from sources within the state of Indiana between and22 among those organizations, trades, or businesses in order to fairly23 reflect and report the income derived from sources within the state of24 Indiana by various taxpayers.25 (n) For purposes of allocation and apportionment of income under26 this article, a taxpayer is taxable in another state if:27 (1) in that state the taxpayer is subject to a net income tax, a28 franchise tax measured by net income, a franchise tax for the29 privilege of doing business, or a corporate stock tax; or30 (2) that state has jurisdiction to subject the taxpayer to a net31 income tax regardless of whether, in fact, the state does or does32 not.33 (o) Notwithstanding subsections (l) and (m), the department may34 not, under any circumstances, require that income, deductions, and35 credits attributable to a taxpayer and another entity be reported in a36 combined income tax return for any taxable year, if the other entity is:37 (1) a foreign corporation; or38 (2) a corporation that is classified as a foreign operating39 corporation for the taxable year by section 2.4 of this chapter.40 (p) Notwithstanding subsections (l) and (m), the department may not41 require that income, deductions, and credits attributable to a taxpayer42 and another entity not described in subsection (o)(1) or (o)(2) be

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1 reported in a combined income tax return for any taxable year, unless2 the department is unable to fairly reflect the taxpayer's adjusted gross3 income for the taxable year through use of other powers granted to the4 department by subsections (l) and (m).5 (q) Notwithstanding subsections (o) and (p), one (1) or more6 taxpayers may petition the department under subsection (l) for7 permission to file a combined income tax return for a taxable year. The8 petition to file a combined income tax return must be completed and9 filed with the department not more than thirty (30) days after the end

10 of the taxpayer's taxable year. A taxpayer filing a combined income tax11 return must petition the department within thirty (30) days after the end12 of the taxpayer's taxable year to discontinue filing a combined income13 tax return.14 (r) This subsection applies to a corporation that is a life insurance15 company (as defined in Section 816(a) of the Internal Revenue Code)16 or an insurance company that is subject to tax under Section 831 of the17 Internal Revenue Code. The corporation's adjusted gross income that18 is derived from sources within Indiana is determined by multiplying the19 corporation's adjusted gross income by a fraction:20 (1) the numerator of which is the direct premiums and annuity21 considerations received during the taxable year for insurance22 upon property or risks in the state; and23 (2) the denominator of which is the direct premiums and annuity24 considerations received during the taxable year for insurance25 upon property or risks everywhere.26 The term "direct premiums and annuity considerations" means the27 gross premiums received from direct business as reported in the28 corporation's annual statement filed with the department of insurance.29 (s) This subsection applies to receipts derived from motorsports30 racing.31 (1) Any purse, prize money, or other amounts earned for32 placement or participation in a race or portion thereof, including33 qualification, shall be attributed to Indiana if the race is conducted34 in Indiana.35 (2) Any amounts received from an individual or entity as a result36 of sponsorship or similar promotional consideration for one (1) or37 more races shall be in this state in the amount received, multiplied38 by the following fraction:39 (A) The numerator of the fraction is the number of racing40 events for which sponsorship or similar promotional41 consideration has been paid in a taxable year and that occur in42 Indiana.

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1 (B) The denominator of the fraction is the total number of2 racing events for which sponsorship or similar promotional3 consideration has been paid in a taxable year.4 (3) Any amounts earned as an incentive for placement or5 participation in one (1) or more races and that are not covered6 under subdivisions (1) or (2) or under IC 6-3-2-3.2 shall be7 attributed to Indiana in the proportion of the races that occurred8 in Indiana.9 This subsection, as enacted in 2013, is intended to be a clarification of

10 the law and not a substantive change in the law.11 (t) Sales of a broadcaster that arise from or relate to the12 broadcast or other distribution of film programming or radio13 programming by any means are in this state if the commercial14 domicile of the broadcaster's customer is in this state. Sales to15 which this subsection applies include income from advertising and16 licensing income from distributing film programming or radio17 programming. For purposes of this subsection, the following18 definitions apply:19 (1) "Broadcaster" means a taxpayer that is a television or20 radio station licensed by the Federal Communications21 Commission, a television or radio broadcast network, a cable22 program network, or a television distribution company. The23 term "broadcaster" does not include a cable service provider24 or a direct broadcast satellite system.25 (2) "Commercial domicile" has the meaning set forth in26 IC 6-3-1-22.27 (3) "Customer" means a person, corporation, partnership,28 limited liability company, or other entity, such as an29 advertiser or licensee, that has a direct connection or30 contractual relationship with the broadcaster under which31 revenue is derived by the broadcaster. The term "customer"32 does not include an advertising agency placing advertising on33 behalf of its client. The client of such an advertising agency is34 the customer.35 (4) "Film programming" means one (1) or more36 performances, events, or productions (or segments of37 performances, events, or productions) intended to be38 distributed for visual and auditory perception, including but39 not limited to news, entertainment, sporting events, plays,40 stories, or other literary, commercial, educational, or artistic41 works.42 (5) "Radio programming" means one (1) or more

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1 performances, events, or productions (or segments of2 performances, events, or productions) intended to be3 distributed for auditory perception, including but not limited4 to news, entertainment, sporting events, plays, stories, or5 other literary, commercial, educational, or artistic works.6 SECTION 4. IC 6-3-2-4, AS AMENDED BY P.L.6-2012,7 SECTION 49, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE8 JANUARY 1, 2016]: Sec. 4. (a) Each taxable year, an individual, or the9 individual's surviving spouse, is entitled to an adjusted gross income

10 tax deduction for the first five thousand dollars ($5,000) of income,11 including retirement or survivor's benefits, received during the taxable12 year by the individual, or the individual's surviving spouse, for the13 individual's service in an active or reserve component of the armed14 forces of the United States, including the army, navy, air force, coast15 guard, marine corps, merchant marine, Indiana army national guard, or16 Indiana air national guard. However, a person who is less than sixty17 (60) years of age on the last day of the person's taxable year, is not, for18 that taxable year, entitled to a deduction under this section for19 retirement or survivor's benefits.20 (b) An individual whose qualified military income is subtracted21 from the individual's federal adjusted gross income under22 IC 6-3-1-3.5(a)(21) IC 6-3-1-3.5(a)(19) for Indiana individual income23 tax purposes is not, for that taxable year, entitled to a deduction under24 this section for the individual's qualified military income.25 SECTION 5. IC 6-3-2-5 IS REPEALED [EFFECTIVE JANUARY26 1, 2016]. Sec. 5. (a) For purposes of this section, "insulation" means27 any material, commonly used in the building industry, which is28 installed for the sole purpose of retarding the passage of heat energy29 into or out of a building.30 (b) A resident individual taxpayer is entitled to a deduction from his31 adjusted gross income for a particular taxable year if, during that32 taxable year, he installs in his residence new, but not replacement,33 insulation, weather stripping, double pane windows, storm doors, or34 storm windows. However, a taxpayer does not qualify for this35 deduction unless the part of his residence in which he makes the36 installation was constructed at least three (3) years before the taxable37 year for which the deduction is claimed.38 (c) The amount of the deduction to which a taxpayer is entitled in39 a particular taxable year is the lesser of:40 (1) the amount the taxpayer pays for labor and materials for the41 installation that is made during the taxable year; or42 (2) one thousand dollars ($1,000).

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1 (d) To obtain the deduction provided by this section, the taxpayer2 must file with the department proof of his costs for the installation and3 a list of the persons or corporations who supplied labor or materials for4 the installation.5 SECTION 6. IC 6-3-2-5.3 IS REPEALED [EFFECTIVE JANUARY6 1, 2016]. Sec. 5.3. (a) This section applies to taxable years beginning7 after December 31, 2008.8 (b) As used in this section, "solar powered roof vent or fan" means9 a roof vent or fan that is powered by solar energy and used to release

10 heat from a building.11 (c) A resident individual taxpayer is entitled to a deduction from the12 taxpayer's adjusted gross income for a particular taxable year if, during13 that taxable year, the taxpayer installs a solar powered roof vent or fan14 on a building owned or leased by the taxpayer.15 (d) The amount of the deduction to which a taxpayer is entitled in16 a particular taxable year is the lesser of:17 (1) one-half (1/2) of the amount the taxpayer pays for labor and18 materials for the installation of a solar powered roof vent or fan19 that is installed during the taxable year; or20 (2) one thousand dollars ($1,000).21 (e) To obtain the deduction provided by this section, a taxpayer22 must file with the department proof of the taxpayer's costs for the23 installation of a solar powered roof vent or fan and a list of the persons24 or corporation that supplied labor or materials for the installation of the25 solar powered roof vent or fan.26 SECTION 7. IC 6-3-2-13, AS AMENDED BY P.L.98-2008,27 SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE28 JANUARY 1, 2016]: Sec. 13. (a) As used in this section, "export29 income" means the gross receipts from the sale, transfer, or exchange30 of tangible personal property destined for international markets that is:31 (1) manufactured at a plant located within a maritime opportunity32 district established under IC 6-1.1-40; and33 (2) shipped through a port operated by the state.34 (b) As used in this section, "export sales ratio" means the quotient35 of:36 (1) the taxpayer's export income; divided by37 (2) the taxpayer's gross receipts from the sale, transfer, or38 exchange of tangible personal property, regardless of its39 destination.40 (c) As used in this section, "taxpayer" means a person or corporation41 that has export income.42 (d) The ports of Indiana established by IC 8-10-1-3 shall notify the

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1 department when a maritime opportunity district is established under2 IC 6-1.1-40. The notice must include:3 (1) the resolution passed by the commission to establish the4 district; and5 (2) a list of all taxpayers located in the district.6 (e) The ports of Indiana shall also notify the department of any7 subsequent changes in the list of taxpayers located in the district.8 (f) A taxpayer is entitled to a deduction from the taxpayer's adjusted9 gross income in an amount equal to the lesser of:

10 (1) the taxpayer's adjusted gross income; or11 (2) the product of the export sales ratio multiplied by the12 percentage set forth in subsection (g).13 A deduction under this section is not permitted for a taxpayer14 whose first year of a deduction begins after December 31, 2015.15 (g) The percentage to be used in determining the amount a taxpayer16 is entitled to deduct under this section depends upon the number of17 years that the taxpayer could have taken a deduction under this section.18 The percentage to be used in subsection (f) is as follows:19 YEAR OF DEDUCTION PERCENTAGE20 1st through 4th 100%21 5th 80%22 6th 60%23 7th 40%24 8th 20%25 9th and thereafter 0%26 (h) The department shall determine, for each taxpayer claiming a27 deduction under this section, the taxpayer's export sales ratio for28 purposes of IC 6-1.1-40. The department shall certify the amount of the29 ratio to the department of local government finance.30 SECTION 8. IC 6-3-2-14.1 IS AMENDED TO READ AS31 FOLLOWS [EFFECTIVE JANUARY 1, 2016]: Sec. 14.1.32 Notwithstanding section 14.5 of this chapter and IC 6-3-4-8.2, a33 payment made after June 30, 2002, on prize money received from a34 winning lottery ticket purchased under IC 4-30 for a lottery held before35 July 1, 2002, is exempt from the adjusted gross income tax and36 supplemental net income tax (repealed) imposed by this article.37 SECTION 9. IC 6-3-2-14.5 IS REPEALED [EFFECTIVE38 JANUARY 1, 2016]. Sec. 14.5. The first one thousand two hundred39 dollars ($1,200) of prize money received from a winning lottery ticket40 purchased under IC 4-30 is exempt from the adjusted gross income tax41 imposed by this article. If the amount of prize money received from a42 winning lottery ticket exceeds one thousand two hundred dollars

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1 ($1,200), the amount of the excess is subject to the adjusted gross2 income tax imposed by this article.3 SECTION 10. IC 6-3-2-17 IS REPEALED [EFFECTIVE4 JANUARY 1, 2016]. Sec. 17. A reward received by an individual is5 exempt from taxation under IC 6-3-1 through IC 6-3-7, in an amount6 not to exceed one thousand dollars ($1,000), if:7 (1) the reward is for information provided to a law enforcement8 official or agency, or to a not-for-profit corporation whose9 exclusive purpose is to assist law enforcement officials or

10 agencies;11 (2) the information that is provided assists in the arrest,12 indictment, or the filing of charges against a person; and13 (3) the individual is not:14 (A) compensated for investigating crimes or accidents15 (including an employee of, or an individual under contract16 with, a law enforcement agency);17 (B) the person convicted of the crime; or18 (C) the victim of the crime.19 SECTION 11. IC 6-3-2-18 IS AMENDED TO READ AS20 FOLLOWS [EFFECTIVE JANUARY 1, 2016]: Sec. 18. (a) As used21 in this section, "eligible medical expense" has the meaning set forth in22 IC 6-8-11-3.23 (b) As used in this section, "medical care savings account" has the24 meaning set forth in IC 6-8-11-6.25 (c) This subsection applies only to money deposited by an26 employer in a medical care savings account before January 1, 2016.27 Except as provided in subsection (g), the amount of money deposited28 by an employer in a medical care savings account established for an29 employee under IC 6-8-11 is exempt from taxation under IC 6-3-130 through IC 6-3-7 as income of the employee in the taxable year in31 which the money is deposited in the account.32 (d) Except as provided in subsection (g), the amount of money that33 is:34 (1) withdrawn from a medical care savings account established35 for an employee under IC 6-8-11; and36 (2) either:37 (A) used by the administrator of the account for a purpose set38 forth in IC 6-8-11-13; or39 (B) used under IC 6-8-11-13 to reimburse an employee for40 eligible medical expenses that the employee has incurred and41 paid for medical care for the employee or a dependent of the42 employee;

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1 is exempt from taxation under IC 6-3-1 through IC 6-3-7 as income of2 the employee.3 (e) Except as provided in IC 6-8-11-11 and IC 6-8-11-11.5, in each4 taxable year, the amount of money that is:5 (1) withdrawn by an employee from a medical care savings6 account established under IC 6-8-11; and7 (2) used for a purpose other than the purposes set forth in8 IC 6-8-11-13;9 is income to the employee that is subject to taxation under IC 6-3-1

10 through IC 6-3-7.11 (f) If an employee withdraws money from the employee's medical12 care savings account under the circumstances set forth in13 IC 6-8-11-17(c), the interest earned on the balance in the account14 during the full tax year in which the withdrawal is made is subject to15 taxation under IC 6-3-1 through IC 6-3-7 as income of the employee.16 (g) A taxpayer that excluded or deducted an amount deposited into17 a medical care savings account from adjusted gross income under:18 (1) section 106 of the Internal Revenue Code;19 (2) section 220 of the Internal Revenue Code; or20 (3) any other section of the Internal Revenue Code;21 is not eligible for an additional exemption from adjusted gross income22 under this section.23 SECTION 12. IC 6-3-2-20, AS AMENDED BY P.L.211-2007,24 SECTION 21, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE25 JANUARY 1, 2016]: Sec. 20. (a) The following definitions apply26 throughout this section:27 (1) "Affiliated group" has the meaning provided in Section 150428 of the Internal Revenue Code, except that the ownership29 percentage in Section 1504(a)(2) of the Internal Revenue Code30 shall be determined using fifty percent (50%) instead of eighty31 percent (80%).32 (2) "Directly related intangible interest expenses" means interest33 expenses that are paid to, or accrued or incurred as a liability to,34 a recipient if:35 (A) the amounts represent, in the hands of the recipient,36 income from making one (1) or more loans; and37 (B) the funds loaned were originally received by the recipient38 from the payment of intangible expenses by any of the39 following:40 (i) The taxpayer.41 (ii) A member of the same affiliated group as the taxpayer.42 (iii) A foreign corporation.

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1 (3) "Foreign corporation" means a corporation that is organized2 under the laws of a country other than the United States and3 would be a member of the same affiliated group as the taxpayer4 if the corporation were organized under the laws of the United5 States.6 (4) "Intangible expenses" means the following amounts to the7 extent these amounts are allowed as deductions in determining8 taxable income under Section 63 of the Internal Revenue Code9 before the application of any net operating loss deduction and

10 special deductions for the taxable year:11 (A) Expenses, losses, and costs directly for, related to, or in12 connection with the acquisition, use, maintenance,13 management, ownership, sale, exchange, or any other14 disposition of intangible property.15 (B) Royalty, patent, technical, and copyright fees.16 (C) Licensing fees.17 (D) Other substantially similar expenses and costs.18 (5) "Intangible property" means patents, patent applications, trade19 names, trademarks, service marks, copyrights, trade secrets, and20 substantially similar types of intangible assets.21 (6) "Interest expenses" means amounts that are allowed as22 deductions under Section 163 of the Internal Revenue Code in23 determining taxable income under Section 63 of the Internal24 Revenue Code before the application of any net operating loss25 deductions and special deductions for the taxable year.26 (7) "Makes a disclosure" means a taxpayer provides the following27 information regarding a transaction with a member of the same28 affiliated group or a foreign corporation involving an intangible29 expense and any or a directly related intangible interest expense30 with the taxpayer's tax return on the forms prescribed by the31 department:32 (A) The name of the recipient.33 (B) The state or country of domicile of the recipient.34 (C) The amount paid to the recipient.35 (D) A copy of federal Form 851, Affiliation Schedule, as filed36 with the taxpayer's federal consolidated tax return.37 (E) The information needed to determine the taxpayer's status38 under the exceptions listed in subsection (c).39 (8) "Recipient" means:40 (A) a member of the same affiliated group as the taxpayer; or41 (B) a foreign corporation;42 to which is paid an item of income that corresponds to an

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1 intangible expense or any directly related intangible interest2 expense.3 (9) "Unrelated party" means a person that, with respect to the4 taxpayer, is not a member of the same affiliated group or a foreign5 corporation.6 (b) Except as provided in subsection (c), in determining its adjusted7 gross income under IC 6-3-1-3.5(b), a corporation subject to the tax8 imposed by IC 6-3-2-1 shall add to its taxable income under Section 639 of the Internal Revenue Code:

10 (1) all intangible expenses; and11 (2) any all directly related intangible interest expenses;12 paid, accrued, or incurred with one (1) or more members of the same13 affiliated group or with one (1) or more foreign corporations.14 (c) The addition of intangible expenses or any directly related15 intangible interest expenses otherwise required in a taxable year under16 subsection (b) is not required if one (1) or more of the following apply17 to the taxable year:18 (1) The taxpayer and the recipient are both included in the same19 consolidated tax return filed under IC 6-3-4-14 or in the same20 combined return filed under IC 6-3-2-2(q) for the taxable year.21 (2) If the recipient receives an item of income that22 corresponds to the directly related interest expenses and the23 recipient:24 (A) is subject to the financial institutions tax under25 IC 6-5.5;26 (B) files a return under IC 6-5.5; and27 (C) apportions the items of income that correspond to the28 intangible expenses and the directly related interest29 expenses in accordance with IC 6-5.5.30 (2) (3) The taxpayer makes a disclosure and, at the request of the31 department, can establish by a preponderance of the evidence32 that:33 (A) the item of income corresponding to the intangible34 expenses and any or the directly related intangible interest35 expenses was included within the recipient's income that is36 subject to tax in:37 (i) a state or possession of the United States; or38 (ii) a country other than the United States;39 that is the recipient's commercial domicile and that imposes a40 net income tax, a franchise tax measured, in whole or in part,41 by net income, or a value added tax;42 (B) the transaction giving rise to the intangible expenses and

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1 any or the directly related intangible interest expenses2 between the taxpayer and the recipient was made at a3 commercially reasonable rate and at terms comparable to an4 arm's length transaction; and5 (C) the transactions giving rise to the intangible expenses and6 any or the directly related intangible interest expenses7 between the taxpayer and the recipient did not have Indiana8 tax avoidance as a principal purpose.9 (3) (4) The taxpayer makes a disclosure and, at the request of the

10 department, can establish by a preponderance of the evidence11 that:12 (A) the recipient regularly engages in transactions involving13 intangible property with one (1) or more unrelated parties on14 terms substantially similar to those of the subject transaction;15 and16 (B) the transaction giving rise to the intangible expenses and17 any or the directly related intangible interest expenses18 between the taxpayer and the recipient did not have Indiana19 tax avoidance as a principal purpose.20 (4) (5) The taxpayer makes a disclosure and, at the request of the21 department, can establish by a preponderance of the evidence22 that:23 (A) the payment was received from a person or entity that is an24 unrelated party, and on behalf of that unrelated party, paid that25 amount to the recipient in an arm's length transaction; and26 (B) the transaction giving rise to the intangible expenses and27 any or the directly related intangible interest expenses28 between the taxpayer and the recipient did not have Indiana29 tax avoidance as a principal purpose.30 (5) (6) The taxpayer makes a disclosure and, at the request of the31 department, can establish by a preponderance of the evidence32 that:33 (A) the recipient paid, accrued, or incurred a liability to an34 unrelated party during the taxable year for an equal or greater35 amount that was directly for, related to, or in connection with36 the same intangible property giving rise to the intangible37 expenses; and38 (B) the transactions giving rise to the intangible expenses and39 any or the directly related intangible interest expenses40 between the taxpayer and the recipient did not have Indiana41 tax avoidance as a principal purpose.42 (6) (7) The taxpayer makes a disclosure and, at the request of the

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1 department, can establish by a preponderance of the evidence2 that:3 (A) the recipient is engaged in:4 (i) substantial business activities from the acquisition, use,5 licensing, maintenance, management, ownership, sale,6 exchange, or any other disposition of intangible property; or7 (ii) other substantial business activities separate and apart8 from the business activities described in item (i);9 as evidenced by the maintenance of a permanent office space

10 and an adequate number of full-time, experienced employees;11 (B) the transactions giving rise to the intangible expenses and12 any or the directly related intangible interest expenses13 between the taxpayer and the recipient did not have Indiana14 tax avoidance as a principal purpose; and15 (C) the transactions were transaction was made at a16 commercially reasonable rate and at terms comparable to an17 arm's length transaction.18 (7) (8) The taxpayer and the department agree, in writing, to the19 application or use of an alternative method of allocation or20 apportionment under section 2(l) or 2(m) of this chapter.21 (8) (9) Upon request by the taxpayer, the department determines22 that the adjustment otherwise required by this section is23 unreasonable.24 (d) For purposes of this section, intangible expenses or directly25 related intangible interest expenses shall be considered to be at a26 commercially reasonable rate or at terms comparable to an arm's length27 transaction if the intangible expenses or directly related intangible28 interest expenses meet the arm's length standards of United States29 Treasury Regulation 1.482-1(b).30 (e) If intangible expenses or directly related intangible interest31 expenses are determined not to be at a commercially reasonable rate or32 at terms comparable to an arm's length transaction for purposes of this33 section, the adjustment required by subsection (b) shall be made only34 to the extent necessary to cause the intangible expenses or directly35 related intangible interest expenses to be at a commercially reasonable36 rate and at terms comparable to an arm's length transaction.37 (f) For purposes of this section, transactions giving rise to intangible38 expenses and any or the directly related intangible interest expenses39 between the taxpayer and the recipient shall be considered as having40 Indiana tax avoidance as the principal purpose if:41 (1) there is not one (1) or more valid business purposes that42 independently sustain the transaction notwithstanding any tax

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1 benefits associated with the transaction; and2 (2) the principal purpose of tax avoidance exceeds any other valid3 business purpose.4 SECTION 13. IC 6-3-2-25, AS AMENDED BY P.L.6-2012,5 SECTION 50, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE6 JANUARY 1, 2016]: Sec. 25. (a) This section applies only to an7 individual who in 2008 paid property taxes that:8 (1) were imposed on the individual's principal place of residence9 for the March 1, 2006, assessment date or the January 15, 2007,

10 assessment date;11 (2) are due after December 31, 2007; and12 (3) are paid on or before the due date for the property taxes.13 (b) As used in this section, "adjusted gross income" has the meaning14 set forth in IC 6-3-1-3.5.15 (c) An individual described in subsection (a) is entitled to a16 deduction from the individual's adjusted gross income for a taxable17 year beginning after December 31, 2007, and before January 1, 2009,18 in an amount equal to the amount determined in the following STEPS:19 STEP ONE: Determine the lesser of:20 (A) two thousand five hundred dollars ($2,500); or21 (B) the total amount of property taxes imposed on the22 individual's principal place of residence for the March 1, 2006,23 assessment date or the January 15, 2007, assessment date and24 paid in 2007 or 2008.25 STEP TWO: Determine the greater of zero (0) or the result of:26 (A) the STEP ONE result; minus27 (B) the total amount of property taxes that:28 (i) were imposed on the individual's principal place of29 residence for the March 1, 2006, assessment date or the30 January 15, 2007, assessment date;31 (ii) were paid in 2007; and32 (iii) were deducted from the individual's adjusted gross33 income under IC 6-3-1-3.5(a)(15) IC 6-3-1-3.5(a)(13) by34 the individual on the individual's state income tax return for35 a taxable year beginning before January 1, 2008.36 (d) The deduction under this section is in addition to any deduction37 that an individual is otherwise entitled to claim under38 IC 6-3-1-3.5(a)(15). IC 6-3-1-3.5(a)(13). However, an individual may39 not deduct under IC 6-3-1-3.5(a)(15) IC 6-3-1-3.5(a)(13) any property40 taxes deducted under this section.41 SECTION 14. IC 6-3.1-15-7 IS AMENDED TO READ AS42 FOLLOWS [EFFECTIVE JANUARY 1, 2016]: Sec. 7. (a) A taxpayer

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1 that has donated during the taxable year qualified computer equipment2 to a service center is entitled to a tax credit as provided in section 8 of3 this chapter.4 (b) A taxpayer is not entitled to a credit under this chapter for5 a contribution made in a taxable year beginning after December6 31, 2015.7 (c) This chapter expires January 1, 2019.8 SECTION 15. IC 6-3.1-16-7, AS AMENDED BY P.L.166-2014,9 SECTION 16, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE

10 JANUARY 1, 2016]: Sec. 7. (a) Subject to section 14 of this chapter,11 a taxpayer is entitled to a credit against the taxpayer's state tax liability12 in the taxable year in which the taxpayer completes the preservation or13 rehabilitation of historic property and obtains the certifications required14 under section 8 of this chapter.15 (b) The amount of the credit is equal to twenty percent (20%) of the16 qualified expenditures that:17 (1) the taxpayer makes for the preservation or rehabilitation of18 historic property; and19 (2) are approved by the office.20 (c) In the case of a husband and wife who:21 (1) own and rehabilitate a historic property jointly; and22 (2) file separate tax returns;23 the husband and wife may take the credit in equal shares or one (1)24 spouse may take the whole credit.25 (d) A taxpayer is not entitled to a credit under this chapter for26 a contribution made in a taxable year beginning after December27 31, 2015.28 (e) This chapter expires January 1, 2019.29 SECTION 16. IC 6-3.1-18-11 IS AMENDED TO READ AS30 FOLLOWS [EFFECTIVE JANUARY 1, 2016]: Sec. 11. (a) A tax31 credit shall be allowable under this chapter only for the taxable year of32 the taxpayer in which the contribution qualifying for the credit is paid.33 (b) A taxpayer is not entitled to a credit under this chapter for34 a contribution made in a taxable year beginning after December35 31, 2015.36 (c) This chapter expires January 1, 2019.37 SECTION 17. IC 6-3.1-19-2, AS AMENDED BY P.L.4-2005,38 SECTION 94, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE39 JULY 1, 2015]: Sec. 2. As used in this chapter, "qualified investment"40 means the amount of a taxpayer's expenditures that is:41 (1) for redevelopment or rehabilitation of property located within42 a community revitalization enhancement district designated under

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1 IC 36-7-13;2 (2) made under a plan adopted by an advisory commission on3 industrial development under IC 36-7-13; and4 (3) approved by the Indiana economic development corporation5 before the expenditure is made.6 Beginning after December 31, 2015, the term does not include a7 taxpayer's expenditures made on property that is classified as8 residential for property tax purposes, except for expenditures that9 were approved by the Indiana economic development corporation

10 before January 1, 2016.11 SECTION 18. IC 6-3.1-20-4, AS AMENDED BY P.L.166-2014,12 SECTION 23, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE13 JANUARY 1, 2016]: Sec. 4. (a) Except as provided in subsection (b),14 an individual is entitled to a credit under this chapter if:15 (1) the individual's Indiana income for the taxable year is less than16 eighteen thousand six hundred dollars ($18,600); and17 (2) the individual pays property taxes in the taxable year on a18 homestead that:19 (A) the individual:20 (i) owns; or21 (ii) is buying under a contract that requires the individual to22 pay property taxes on the homestead, if the contract or a23 memorandum of the contract is recorded in the county24 recorder's office; and25 (B) is located in a county having a population of more than26 four hundred thousand (400,000) but less than seven hundred27 thousand (700,000).28 (b) An individual is not entitled to a credit under this chapter for a29 taxable year for property taxes paid on the individual's homestead if the30 individual claims the deduction under IC 6-3-1-3.5(a)(15)31 IC 6-3-1-3.5(a)(13) for the homestead for that same taxable year.32 SECTION 19. IC 6-3.1-21-6, AS AMENDED BY P.L.229-2011,33 SECTION 87, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE34 JANUARY 1, 2016]: Sec. 6. (a) Except as provided by subsection (b),35 an individual who is eligible for an earned income tax credit under36 Section 32 of the Internal Revenue Code as it existed before being37 amended by the Tax Relief, Unemployment Insurance Reauthorization,38 and Job Creation Act of 2010 (P.L. 111-312), is eligible for a credit39 under this chapter equal to nine percent (9%) of the amount of the40 federal earned income tax credit that the individual:41 (1) is eligible to receive in the taxable year; and42 (2) claimed for the taxable year;

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1 under Section 32 of the Internal Revenue Code. as it existed before2 being amended by the Tax Relief, Unemployment Insurance3 Reauthorization, and Job Creation Act of 2010 (P.L. 111-312).4 (b) In the case of a nonresident taxpayer or a resident taxpayer5 residing in Indiana for a period of less than the taxpayer's entire taxable6 year, the amount of the credit is equal to the product of:7 (1) the amount determined under subsection (a); multiplied by8 (2) the quotient of the taxpayer's income taxable in Indiana9 divided by the taxpayer's total income.

10 (c) If the credit amount exceeds the taxpayer's adjusted gross11 income tax liability for the taxable year, the excess less any advance12 payments of the credit made by the taxpayer's employer under13 IC 6-3-4-8 that reduce the excess, shall be refunded to the taxpayer.14 SECTION 20. IC 6-3.1-22-8, AS AMENDED BY P.L.166-2014,15 SECTION 28, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE16 JANUARY 1, 2016]: Sec. 8. (a) Subject to section 14 of this chapter,17 a taxpayer is entitled to a credit against the taxpayer's state tax liability18 in the taxable year in which the taxpayer completes the preservation or19 rehabilitation of historic property and obtains the certifications required20 under section 9 of this chapter.21 (b) The amount of the credit is equal to twenty percent (20%) of the22 qualified expenditures that:23 (1) the taxpayer makes for the preservation or rehabilitation of24 historic property; and25 (2) are approved by the office.26 (c) In the case of a husband and wife who:27 (1) own and rehabilitate a historic property jointly; and28 (2) file separate tax returns;29 the husband and wife may take the credit in equal shares or one (1)30 spouse may take the whole credit.31 (d) A taxpayer may not claim a credit under this chapter for32 qualified expenditures approved in a taxable year beginning after33 December 31, 2015.34 (e) This chapter expires January 1, 2033.35 SECTION 21. IC 6-3.5-1.1-7 IS REPEALED [EFFECTIVE36 JANUARY 1, 2016]. Sec. 7. (a) If for a particular taxable year a county37 taxpayer is, or a county taxpayer and the taxpayer's spouse who file a38 joint return are, allowed a credit for the elderly or individuals with a39 total disability under Section 22 of the Internal Revenue Code, the40 county taxpayer is, or the county taxpayer and the taxpayer's spouse41 are, entitled to a credit against the taxpayer's or the taxpayer's and the42 taxpayer's spouse's county adjusted gross income tax liability for that

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1 same taxable year. The amount of the credit equals the lesser of:2 (1) the product of:3 (A) the taxpayer's or the taxpayer's and the taxpayer's spouse's4 credit for the elderly or individuals with a total disability for5 that same taxable year; multiplied by6 (B) a fraction, the numerator of which is the county adjusted7 gross income tax rate imposed against the county taxpayer, or8 the county taxpayer and the taxpayer's spouse, and the9 denominator of which is fifteen hundredths (0.15); or

10 (2) the amount of county adjusted gross income tax imposed on11 the county taxpayer, or the county taxpayer and the taxpayer's12 spouse.13 (b) If a county taxpayer and the taxpayer's spouse file a joint return14 and are subject to different county adjusted gross income tax rates for15 the same taxable year, they shall compute the credit under this section16 by using the formula provided by subsection (a), except that they shall17 use the average of the two (2) county adjusted gross income tax rates18 imposed against them as the numerator referred to in subsection19 (a)(1)(B).20 SECTION 22. IC 6-3.5-1.1-18, AS AMENDED BY P.L.146-2008,21 SECTION 330, IS AMENDED TO READ AS FOLLOWS22 [EFFECTIVE JANUARY 1, 2016]: Sec. 18. (a) Except as otherwise23 provided in this chapter, all provisions of the adjusted gross income tax24 law (IC 6-3) concerning:25 (1) definitions;26 (2) declarations of estimated tax;27 (3) filing of returns;28 (4) remittances;29 (5) incorporation of the provisions of the Internal Revenue Code;30 (6) penalties and interest;31 (7) exclusion of military pay credits for withholding; and32 (8) exemptions and deductions;33 apply to the imposition, collection, and administration of the tax34 imposed by this chapter.35 (b) The provisions of IC 6-3-1-3.5(a)(6), IC 6-3-3-3 and IC 6-3-3-536 and IC 6-3-5-1 do not apply to the tax imposed by this chapter.37 (c) Notwithstanding subsections (a) and (b), each employer shall38 report to the department the amount of withholdings attributable to39 each county. This report shall be submitted to the department:40 (1) each time the employer remits to the department the tax that41 is withheld; and42 (2) annually along with the employer's annual withholding report.

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1 SECTION 23. IC 6-3.5-6-22, AS AMENDED BY P.L.146-2008,2 SECTION 340, IS AMENDED TO READ AS FOLLOWS3 [EFFECTIVE JANUARY 1, 2016]: Sec. 22. (a) Except as otherwise4 provided in subsection (b) and the other provisions of this chapter, all5 provisions of the adjusted gross income tax law (IC 6-3) concerning:6 (1) definitions;7 (2) declarations of estimated tax;8 (3) filing of returns;9 (4) deductions or exemptions from adjusted gross income;

10 (5) remittances;11 (6) incorporation of the provisions of the Internal Revenue Code;12 (7) penalties and interest; and13 (8) exclusion of military pay credits for withholding;14 apply to the imposition, collection, and administration of the tax15 imposed by this chapter.16 (b) The provisions of IC 6-3-1-3.5(a)(6), IC 6-3-3-3 and IC 6-3-3-517 and IC 6-3-5-1 do not apply to the tax imposed by this chapter.18 (c) Notwithstanding subsections (a) and (b), each employer shall19 report to the department the amount of withholdings attributable to20 each county. This report shall be submitted to the department:21 (1) each time the employer remits to the department the tax that22 is withheld; and23 (2) annually along with the employer's annual withholding report.24 SECTION 24. IC 6-3.5-6-24 IS REPEALED [EFFECTIVE25 JANUARY 1, 2016]. Sec. 24. (a) If for a particular taxable year a26 county taxpayer is, or a county taxpayer and the taxpayer's spouse who27 file a joint return are, allowed a credit for the elderly or individuals28 with a total disability under Section 22 of the Internal Revenue Code,29 the county taxpayer is, or the county taxpayer and the taxpayer's spouse30 are, entitled to a credit against the county option income tax liability for31 that same taxable year. The amount of the credit equals the lesser of:32 (1) the product of:33 (A) the credit for the elderly or individuals with a total34 disability for that same taxable year; multiplied by35 (B) a fraction, the numerator of which is the county option36 income tax rate imposed against the county taxpayer, or the37 county taxpayer and the taxpayer's spouse, and the38 denominator of which is fifteen-hundredths (0.15); or39 (2) the amount of county option income tax imposed on the40 county taxpayer, or the county taxpayer and the taxpayer's spouse.41 (b) If a county taxpayer and the taxpayer's spouse file a joint return42 and are subject to different county option income tax rates for the same

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1 taxable year, they shall compute the credit under this section by using2 the formula provided by subsection (a), except that they shall use the3 average of the two (2) county option income tax rates imposed against4 them as the numerator referred to in subsection (a)(1)(B).5 SECTION 25. IC 6-3.5-7-9 IS REPEALED [EFFECTIVE6 JANUARY 1, 2016]. Sec. 9. (a) If for a taxable year a county taxpayer7 is (or a county taxpayer and a county taxpayer's spouse who file a joint8 return are) allowed a credit for the elderly or individuals with a total9 disability under Section 22 of the Internal Revenue Code, the county

10 taxpayer is (or the county taxpayer and the county taxpayer's spouse11 are) entitled to a credit against the county taxpayer's (or the county12 taxpayer's and the county taxpayer's spouse's) county economic13 development income tax liability for that same taxable year. The14 amount of the credit equals the lesser of:15 (1) the product of:16 (A) the county taxpayer's (or the county taxpayer's and the17 county taxpayer's spouse's) credit for the elderly or individuals18 with a total disability for that same taxable year; multiplied by19 (B) a fraction. The numerator of the fraction is the county20 economic development income tax rate imposed against the21 county taxpayer (or against the county taxpayer and the county22 taxpayer's spouse). The denominator of the fraction is23 fifteen-hundredths (0.15); or24 (2) the amount of county economic development income tax25 imposed on the county taxpayer (or the county taxpayer and the26 county taxpayer's spouse).27 (b) If a county taxpayer and the county taxpayer's spouse file a joint28 return and are subject to different county economic development29 income tax rates for the same taxable year, they shall compute the30 credit under this section by using the formula provided by subsection31 (a), except that they shall use the average of the two (2) county32 economic development income tax rates imposed against them as the33 numerator referred to in subsection (a)(1)(B).34 SECTION 26. IC 6-3.5-7-18, AS AMENDED BY P.L.146-2008,35 SECTION 348, IS AMENDED TO READ AS FOLLOWS36 [EFFECTIVE JANUARY 1, 2016]: Sec. 18. (a) Except as otherwise37 provided in this chapter, all provisions of the adjusted gross income tax38 law (IC 6-3) concerning:39 (1) definitions;40 (2) declarations of estimated tax;41 (3) filing of returns;42 (4) remittances;

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1 (5) incorporation of the provisions of the Internal Revenue Code;2 (6) penalties and interest;3 (7) exclusion of military pay credits for withholding; and4 (8) exemptions and deductions;5 apply to the imposition, collection, and administration of the tax6 imposed by this chapter.7 (b) The provisions of IC 6-3-1-3.5(a)(6), IC 6-3-3-3 and IC 6-3-3-58 and IC 6-3-5-1 do not apply to the tax imposed by this chapter.9 (c) Notwithstanding subsections (a) and (b), each employer shall

10 report to the department the amount of withholdings attributable to11 each county. This report shall be submitted to the department:12 (1) each time the employer remits to the department the tax that13 is withheld; and14 (2) annually along with the employer's annual withholding report.15 SECTION 27. IC 6-5.5-1-2, AS AMENDED BY P.L.205-2013,16 SECTION 124, IS AMENDED TO READ AS FOLLOWS17 [EFFECTIVE JANUARY 1, 2016]: Sec. 2. (a) Except as provided in18 subsections (b) through (d), "adjusted gross income" means taxable19 income as defined in Section 63 of the Internal Revenue Code, adjusted20 as follows:21 (1) Add the following amounts:22 (A) An amount equal to a deduction allowed or allowable23 under Section 166, Section 585, or Section 593 of the Internal24 Revenue Code.25 (B) An amount equal to a deduction allowed or allowable26 under Section 170 of the Internal Revenue Code.27 (C) An amount equal to a deduction or deductions allowed or28 allowable under Section 63 of the Internal Revenue Code for29 taxes based on or measured by income and levied at the state30 level by a state of the United States or levied at the local level31 by any subdivision of a state of the United States.32 (D) The amount of interest excluded under Section 103 of the33 Internal Revenue Code or under any other federal law, minus34 the associated expenses disallowed in the computation of35 taxable income under Section 265 of the Internal Revenue36 Code.37 (E) An amount equal to the deduction allowed under Section38 172 or 1212 of the Internal Revenue Code for net operating39 losses or net capital losses.40 (F) For a taxpayer that is not a large bank (as defined in41 Section 585(c)(2) of the Internal Revenue Code), an amount42 equal to the recovery of a debt, or part of a debt, that becomes

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1 worthless to the extent a deduction was allowed from gross2 income in a prior taxable year under Section 166(a) of the3 Internal Revenue Code.4 (G) Add the amount necessary to make the adjusted gross5 income of any taxpayer that owns property for which bonus6 depreciation was allowed in the current taxable year or in an7 earlier taxable year equal to the amount of adjusted gross8 income that would have been computed had an election not9 been made under Section 168(k) of the Internal Revenue Code

10 to apply bonus depreciation to the property in the year that it11 was placed in service.12 (H) Add the amount necessary to make the adjusted gross13 income of any taxpayer that placed Section 179 property (as14 defined in Section 179 of the Internal Revenue Code) in15 service in the current taxable year or in an earlier taxable year16 equal to the amount of adjusted gross income that would have17 been computed had an election for federal income tax18 purposes not been made for the year in which the property was19 placed in service to take deductions under Section 179 of the20 Internal Revenue Code in a total amount exceeding21 twenty-five thousand dollars ($25,000).22 (I) Add an amount equal to the amount that a taxpayer claimed23 as a deduction for domestic production activities for the24 taxable year under Section 199 of the Internal Revenue Code25 for federal income tax purposes.26 (J) Add an amount equal to any income not included in gross27 income as a result of the deferral of income arising from28 business indebtedness discharged in connection with the29 reacquisition after December 31, 2008, and before January 1,30 2011, of an applicable debt instrument, as provided in Section31 108(i) of the Internal Revenue Code. Subtract from the32 adjusted gross income of any taxpayer that added an amount33 to adjusted gross income in a previous year the amount34 necessary to offset the amount included in federal gross35 income as a result of the deferral of income arising from36 business indebtedness discharged in connection with the37 reacquisition after December 31, 2008, and before January 1,38 2011, of an applicable debt instrument, as provided in Section39 108(i) of the Internal Revenue Code.40 (K) Add or subtract the amount necessary to make the adjusted41 gross income of any taxpayer that claimed the special42 allowance for qualified disaster assistance property under

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1 Section 168(n) of the Internal Revenue Code equal to the2 amount of adjusted gross income that would have been3 computed had the special allowance not been claimed for the4 property.5 (L) Add or subtract the amount necessary to make the adjusted6 gross income of any taxpayer that made an election under7 Section 179C of the Internal Revenue Code to expense costs8 for qualified refinery property equal to the amount of adjusted9 gross income that would have been computed had an election

10 for federal income tax purposes not been made for the year.11 (M) Add or subtract the amount necessary to make the12 adjusted gross income of any taxpayer that made an election13 under Section 181 of the Internal Revenue Code to expense14 costs for a qualified film or television production equal to the15 amount of adjusted gross income that would have been16 computed had an election for federal income tax purposes not17 been made for the year.18 (N) Add or subtract the amount necessary to make the adjusted19 gross income of any taxpayer that treated a loss from the sale20 or exchange of preferred stock in:21 (i) the Federal National Mortgage Association, established22 under the Federal National Mortgage Association Charter23 Act (12 U.S.C. 1716 et seq.); or24 (ii) the Federal Home Loan Mortgage Corporation,25 established under the Federal Home Loan Mortgage26 Corporation Act (12 U.S.C. 1451 et seq.);27 as an ordinary loss under Section 301 of the Emergency28 Economic Stabilization Act of 2008 in the current taxable year29 or in an earlier taxable year equal to the amount of adjusted30 gross income that would have been computed had the loss not31 been treated as an ordinary loss.32 (O) (K) Add an amount equal to any exempt insurance income33 under Section 953(e) of the Internal Revenue Code for active34 financing income under Subpart F, Subtitle A, Chapter 1,35 Subchapter N of the Internal Revenue Code.36 (2) Subtract the following amounts:37 (A) Income that the United States Constitution or any statute38 of the United States prohibits from being used to measure the39 tax imposed by this chapter.40 (B) Income that is derived from sources outside the United41 States, as defined by the Internal Revenue Code.42 (C) An amount equal to a debt or part of a debt that becomes

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1 worthless, as permitted under Section 166(a) of the Internal2 Revenue Code.3 (D) An amount equal to any bad debt reserves that are4 included in federal income because of accounting method5 changes required by Section 585(c)(3)(A) or Section 593 of6 the Internal Revenue Code.7 (E) The amount necessary to make the adjusted gross income8 of any taxpayer that owns property for which bonus9 depreciation was allowed in the current taxable year or in an

10 earlier taxable year equal to the amount of adjusted gross11 income that would have been computed had an election not12 been made under Section 168(k) of the Internal Revenue Code13 to apply bonus depreciation.14 (F) The amount necessary to make the adjusted gross income15 of any taxpayer that placed Section 179 property (as defined16 in Section 179 of the Internal Revenue Code) in service in the17 current taxable year or in an earlier taxable year equal to the18 amount of adjusted gross income that would have been19 computed had an election for federal income tax purposes not20 been made for the year in which the property was placed in21 service to take deductions under Section 179 of the Internal22 Revenue Code in a total amount exceeding twenty-five23 thousand dollars ($25,000).24 (G) Income that is:25 (i) exempt from taxation under IC 6-3-2-21.7; and26 (ii) included in the taxpayer's taxable income under the27 Internal Revenue Code.28 (H) This clause does not apply to payments made for services29 provided to a business that was enrolled and participated in the30 E-Verify program (as defined in IC 22-5-1.7-3) during the time31 the taxpayer conducted business in Indiana in the taxable year.32 For a taxable year beginning after June 30, 2011, add the33 amount of any trade or business deduction allowed under the34 Internal Revenue Code for wages, reimbursements, or other35 payments made for services provided in Indiana by an36 individual for services as an employee, if the individual was,37 during the period of service, prohibited from being hired as an38 employee under 8 U.S.C. 1324a.39 (b) In the case of a credit union, "adjusted gross income" for a40 taxable year means the total transfers to undivided earnings minus41 dividends for that taxable year after statutory reserves are set aside42 under IC 28-7-1-24.

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1 (c) In the case of an investment company, "adjusted gross income"2 means the company's federal taxable income plus the amount excluded3 from federal gross income under Section 103 of the Internal Revenue4 Code for interest received on an obligation of a state other than Indiana,5 or a political subdivision of such a state, that is acquired by the6 taxpayer after December 31, 2011, multiplied by the quotient of:7 (1) the aggregate of the gross payments collected by the company8 during the taxable year from old and new business upon9 investment contracts issued by the company and held by residents

10 of Indiana; divided by11 (2) the total amount of gross payments collected during the12 taxable year by the company from the business upon investment13 contracts issued by the company and held by persons residing14 within Indiana and elsewhere.15 (d) As used in subsection (c), "investment company" means a16 person, copartnership, association, limited liability company, or17 corporation, whether domestic or foreign, that:18 (1) is registered under the Investment Company Act of 1940 (1519 U.S.C. 80a-1 et seq.); and20 (2) solicits or receives a payment to be made to itself and issues21 in exchange for the payment:22 (A) a so-called bond;23 (B) a share;24 (C) a coupon;25 (D) a certificate of membership;26 (E) an agreement;27 (F) a pretended agreement; or28 (G) other evidences of obligation;29 entitling the holder to anything of value at some future date, if the30 gross payments received by the company during the taxable year31 on outstanding investment contracts, plus interest and dividends32 earned on those contracts (by prorating the interest and dividends33 earned on investment contracts by the same proportion that34 certificate reserves (as defined by the Investment Company Act35 of 1940) is to the company's total assets) is at least fifty percent36 (50%) of the company's gross payments upon investment37 contracts plus gross income from all other sources except38 dividends from subsidiaries for the taxable year. The term39 "investment contract" means an instrument listed in clauses (A)40 through (G).41 (e) For purposes of this section, if a taxpayer:42 (1) claimed the special allowance for qualified disaster

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1 assistance property under Section 168(n) of the Internal2 Revenue Code;3 (2) made an election under Section 179C of the Internal4 Revenue Code to expense costs for qualified refinery property5 equal to the amount of adjusted gross income that would have6 been computed had an election for federal income tax7 purposes not been made for the year;8 (3) made an election under Section 181 of the Internal9 Revenue Code to expense costs for a qualified film or

10 television production equal to the amount of adjusted gross11 income that would have been computed had an election for12 federal income tax purposes not been made for the year; or13 (4) treated a loss from the sale or exchange of preferred stock14 in:15 (A) the Federal National Mortgage Association, established16 under the Federal National Mortgage Association Charter17 Act (12 U.S.C. 1716 et seq.); or18 (B) the Federal Home Loan Mortgage Corporation,19 established under the Federal Home Loan Mortgage20 Corporation Act (12 U.S.C. 1451 et seq.);21 as an ordinary loss under Section 301 of the Emergency22 Economic Stabilization Act of 2008 for any taxable year23 beginning before January 1, 2015;24 the taxpayer shall continue to add or subtract the amounts25 required under this section for the taxable years beginning after26 December 31, 2014, as provided in this section as in effect on27 December 31, 2014. However, any amount otherwise allowable as28 a deduction but not deducted in a taxable year beginning before29 January 1, 2020, shall be deducted in the taxpayer's first taxable30 year beginning after December 31, 2019.31 SECTION 28. IC 6-6-5-1, AS AMENDED BY P.L.259-2013,32 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE33 JANUARY 1, 2016]: Sec. 1. (a) As used in this chapter, "vehicle"34 means a vehicle subject to annual registration as a condition of its35 operation on the public highways pursuant to the motor vehicle36 registration laws of the state.37 (b) As used in this chapter, "mobile home" means a38 nonself-propelled vehicle designed for occupancy as a dwelling or39 sleeping place.40 (c) As used in this chapter, "bureau" means the bureau of motor41 vehicles.42 (d) As used in this chapter, "license branch" means a branch office

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1 of the bureau authorized to register motor vehicles pursuant to the laws2 of the state.3 (e) As used in this chapter, "owner" means the person in whose4 name the vehicle or trailer is registered (as defined in IC 9-13-2).5 (f) As used in this chapter, "motor home" means a self-propelled6 vehicle having been designed and built as an integral part thereof7 having living and sleeping quarters, including that which is commonly8 referred to as a recreational vehicle.9 (g) As used in this chapter, "last preceding annual excise tax

10 liability" means either:11 (1) the amount of excise tax liability to which the vehicle was12 subject on the owner's last preceding regular annual registration13 date; or14 (2) the amount of excise tax liability to which a vehicle that was15 registered after the owner's last preceding annual registration date16 would have been subject if it had been registered on that date.17 (h) As used in this chapter, "trailer" means a device having a gross18 vehicle weight equal to or less than three thousand (3,000) pounds that19 is pulled behind a vehicle and that is subject to annual registration as20 a condition of its operation on the public highways pursuant to the21 motor vehicle registration laws of the state. The term includes any22 utility, boat, or other two (2) wheeled trailer.23 (i) This chapter does not apply to the following:24 (1) Vehicles owned, or leased and operated, by the United States,25 the state, or political subdivisions of the state.26 (2) Mobile homes and motor homes.27 (3) Vehicles assessed under IC 6-1.1-8.28 (4) Vehicles subject to registration as trucks under the motor29 vehicle registration laws of the state, except trucks having a30 declared gross weight not exceeding eleven thousand (11,000)31 pounds, trailers, semitrailers, tractors, and buses.32 (5) Vehicles owned, or leased and operated, by a postsecondary33 educational institution described in IC 6-3-3-5(d) that:34 (A) normally maintains a regular faculty and curriculum35 and normally has a regularly organized body of students36 in attendance at the place where its educational activities37 are carried on;38 (B) regularly offers education at a level above grade 12;39 (C) regularly awards either associate, bachelor's, master's,40 or doctoral degrees, or any combination thereof; and41 (D) is accredited by the North Central Association of42 Colleges and Schools, the Indiana state board of education,

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1 or the American Association of Theological Schools.2 (6) Vehicles owned, or leased and operated, by a volunteer fire3 department (as defined in IC 36-8-12-2).4 (7) Vehicles owned, or leased and operated, by a volunteer5 emergency ambulance service that:6 (A) meets the requirements of IC 16-31; and7 (B) has only members that serve for no compensation or a8 nominal annual compensation of not more than three thousand9 five hundred dollars ($3,500).

10 (8) Vehicles that are exempt from the payment of registration fees11 under IC 9-18-3-1.12 (9) Farm wagons.13 (10) Off-road vehicles (as defined in IC 14-8-2-185).14 (11) Snowmobiles (as defined in IC 14-8-2-261).15 SECTION 29. IC 6-6-5.1-1, AS ADDED BY P.L.131-2008,16 SECTION 22, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE17 JANUARY 1, 2016]: Sec. 1. This chapter does not apply to the18 following:19 (1) A vehicle subject to the motor vehicle excise tax under20 IC 6-6-5.21 (2) A vehicle owned or leased and operated by the United States,22 the state, or a political subdivision of the state.23 (3) A mobile home.24 (4) A vehicle assessed under IC 6-1.1-8.25 (5) A vehicle subject to the commercial vehicle excise tax under26 IC 6-6-5.5.27 (6) A trailer subject to the annual excise tax imposed under28 IC 6-6-5-5.5.29 (7) A bus (as defined in IC 9-13-2-17(a)).30 (8) A vehicle owned or leased and operated by a postsecondary31 educational institution (as described in IC 6-3-3-5(d) that:32 (A) normally maintains a regular faculty and curriculum33 and normally has a regularly organized body of students34 in attendance at the place where its educational activities35 are carried on;36 (B) regularly offers education at a level above grade 12;37 (C) regularly awards either associate, bachelor's, master's,38 or doctoral degrees, or any combination thereof; and39 (D) is accredited by the North Central Association of40 Colleges and Schools, the Indiana state board of education,41 or the American Association of Theological Schools.42 (9) A vehicle owned or leased and operated by a volunteer fire

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1 department (as defined in IC 36-8-12-2).2 (10) A vehicle owned or leased and operated by a volunteer3 emergency ambulance service that:4 (A) meets the requirements of IC 16-31; and5 (B) has only members who serve for no compensation or a6 nominal annual compensation of not more than three thousand7 five hundred dollars ($3,500).8 (11) A vehicle that is exempt from the payment of registration9 fees under IC 9-18-3-1.

10 (12) A farm wagon.11 (13) A recreational vehicle or truck camper in the inventory of12 recreational vehicles and truck campers held for sale by a13 manufacturer, distributor, or dealer in the course of business.14 SECTION 30. IC 6-6-5.5-2, AS AMENDED BY P.L.2-2007,15 SECTION 127, IS AMENDED TO READ AS FOLLOWS16 [EFFECTIVE JANUARY 1, 2016]: Sec. 2. (a) Except as provided in17 subsection (b), this chapter applies to all commercial vehicles.18 (b) This chapter does not apply to the following:19 (1) Vehicles owned or leased and operated by the United States,20 the state, or political subdivisions of the state.21 (2) Mobile homes and motor homes.22 (3) Vehicles assessed under IC 6-1.1-8.23 (4) Buses subject to apportioned registration under the24 International Registration Plan.25 (5) Vehicles subject to taxation under IC 6-6-5.26 (6) Vehicles owned or leased and operated by a postsecondary27 educational institution described in IC 6-3-3-5(d) that:28 (A) normally maintains a regular faculty and curriculum29 and normally has a regularly organized body of students30 in attendance at the place where its educational activities31 are carried on;32 (B) regularly offers education at a level above grade 12;33 (C) regularly awards either associate, bachelor's, master's,34 or doctoral degrees, or any combination thereof; and35 (D) is accredited by the North Central Association of36 Colleges and Schools, the Indiana state board of education,37 or the American Association of Theological Schools.38 (7) Vehicles owned or leased and operated by a volunteer fire39 department (as defined in IC 36-8-12-2).40 (8) Vehicles owned or leased and operated by a volunteer41 emergency ambulance service that:42 (A) meets the requirements of IC 16-31; and

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1 (B) has only members that serve for no compensation or a2 nominal annual compensation of not more than three thousand3 five hundred dollars ($3,500).4 (9) Vehicles that are exempt from the payment of registration fees5 under IC 9-18-3-1.6 (10) Farm wagons.7 (11) A vehicle in the inventory of vehicles held for sale by a8 manufacturer, distributor, or dealer in the course of business.9 SECTION 31. IC 6-8-11-9 IS AMENDED TO READ AS

10 FOLLOWS [EFFECTIVE JANUARY 1, 2016]: Sec. 9. (a) Except as11 otherwise provided by statute, contract, or a collective bargaining12 agreement, an employer may establish a medical care savings account13 program for the employer's employees.14 (b) An employer that establishes a medical care savings account15 program under this chapter shall, before making any contributions to16 medical care savings accounts under the program, inform all employees17 in writing of the federal tax status of contributions made under this18 chapter.19 (c) Except as provided in sections 11.5, 17, and 23 of this chapter,20 the:21 (1) principal contributed by an employer to a medical care savings22 account before January 1, 2016;23 (2) interest earned on money on deposit in a medical care savings24 account; and25 (3) money:26 (A) paid out of a medical care savings account for eligible27 medical expenses; or28 (B) used to reimburse an employee for eligible medical29 expenses;30 are exempt from taxation as income of the employee under IC 6-3-2-18.31 SECTION 32. IC 6-8-11-11.5 IS ADDED TO THE INDIANA32 CODE AS A NEW SECTION TO READ AS FOLLOWS33 [EFFECTIVE JANUARY 1, 2016]: Sec. 11.5. Notwithstanding34 sections 17 and 23 of this chapter, if an employer contributes35 money to an account under this chapter after December 31, 2015,36 for which no exemption applies under IC 6-3-2-18(c):37 (1) the money may be withdrawn from the account by the38 employee at any time and for any purpose without a penalty;39 (2) the withdrawal of the money by the employee is not40 income to the employee that is subject to taxation under41 IC 6-3-1 through IC 6-3-7; and42 (3) income earned on the money while it is in the account is

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1 not income to the employee that is subject to taxation under2 IC 6-3-1 through IC 6-3-7.3 SECTION 33. IC 6-8-11-17 IS AMENDED TO READ AS4 FOLLOWS [EFFECTIVE JANUARY 1, 2016]: Sec. 17. (a) An5 employee may, under this section, withdraw money from the6 employee's medical care savings account for a purpose other than the7 purposes set forth in section 13 of this chapter.8 (b) Except as provided in section sections 11(b) and 11.5 of this9 chapter, if an employee withdraws money from the employee's medical

10 care savings account on the last business day of the account11 administrator's business year for a purpose not set forth in section 1312 of this chapter:13 (1) the money withdrawn is income to the individual that is14 subject to taxation under IC 6-3-2-18(e); but15 (2) the withdrawal does not:16 (A) subject the employee to a penalty; or17 (B) make the interest earned on the account during the tax year18 taxable as income of the employee.19 (c) Except as provided in section sections 11(b) and 11.5 of this20 chapter, if an employee withdraws money for a purpose not set forth in21 section 13 of this chapter at any time other than the last business day22 of the account administrator's business year, all of the following apply:23 (1) The amount of the withdrawal is income to the individual that24 is subject to taxation under IC 6-3-2-18(e).25 (2) The administrator shall withhold and, on behalf of the26 employee, pay a penalty to the department of state revenue equal27 to ten percent (10%) of the amount of the withdrawal.28 (3) All interest earned on the balance in the account during the tax29 year in which a withdrawal under this subsection is made is30 income to the individual that is subject to taxation under31 IC 6-3-2-18(f).32 (d) Money paid to the department of state revenue as a penalty33 under this section shall be deposited in the local health maintenance34 fund established by IC 16-46-10-1.35 SECTION 34. IC 6-8-11-23 IS AMENDED TO READ AS36 FOLLOWS [EFFECTIVE JANUARY 1, 2016]: Sec. 23. (a) This37 section applies when the employment of an individual by an employer38 that participates in a medical care savings account program is39 terminated.40 (b) If the former employer is not informed, within ninety (90) days41 after the former employee's final day of employment, of the name and42 address of an account administrator to which the former employer is

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1 transferring the former employee's medical care savings account under2 section 21 of this chapter, the former employer shall pay the money in3 the former employee's medical care savings account to the former4 employee under subsection (d).5 (c) If:6 (1) the former employee, under section 22(2) of this chapter,7 requests in writing that the former employer's account8 administrator remain the administrator of the individual's medical9 care savings account; and

10 (2) the account administrator does not agree to retain the account;11 the former employer shall, within ninety (90) days after the former12 employee's final day of employment, pay the money in the former13 employee's medical care savings account to the former employee under14 subsection (d).15 (d) An employer that is required under this section to pay the money16 in a former employee's medical care savings account to the former17 employee shall mail to the former employee, at the former employee's18 last known address, a check for the balance in the account on the19 ninety-first day after the employee's final day of employment.20 (e) Except as provided in section sections 11(b) and 11.5 of this21 chapter, money that is paid to a former employee under subsection (d):22 (1) is subject to taxation under IC 6-3-1 through IC 6-3-7 as23 income of the individual; but24 (2) is not subject to the penalty referred to in section 17(c)(2) of25 this chapter.26 SECTION 35. IC 6-8.1-3-17, AS AMENDED BY P.L.236-2005,27 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE28 JULY 1, 2015]: Sec. 17. (a) Before an original tax appeal is filed with29 the tax court under IC 33-26, the commissioner may settle any tax30 liability dispute if a substantial doubt exists as to:31 (1) the constitutionality of the tax under the Constitution of the32 State of Indiana;33 (2) the right to impose the tax;34 (3) the correct amount of tax due;35 (4) the collectibility collectability of the tax; or36 (5) whether the taxpayer is a resident or nonresident of Indiana.37 (b) After an original tax appeal is filed with the tax court under38 IC 33-26, and notwithstanding IC 4-6-2-11, the commissioner may39 settle a tax liability dispute with an amount in contention of twenty-five40 thousand dollars ($25,000) or less. Notwithstanding IC 6-8.1-7-1(a),41 the terms of a settlement under this subsection are available for public42 inspection.

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1 (c) The department shall establish an amnesty program for taxpayers2 having an unpaid tax liability for a listed tax that was due and payable3 for a tax period ending before July 1, 2004. January 1, 2013. A4 taxpayer is not eligible for the amnesty program:5 (1) for any tax liability resulting from the taxpayer's failure to6 comply with IC 6-3-1-3.5(b)(3) with regard to the tax imposed by7 IC 4-33-13 or IC 4-35-8; or8 (2) if the taxpayer participated in any previous amnesty9 program under:

10 (A) this section (as in effect on December 31, 2014); or11 (B) IC 6-2.5-14.12 The time in which a voluntary payment of tax liability may be made (or13 the taxpayer may enter into a payment program acceptable to the14 department for the payment of the unpaid listed taxes in full in the15 manner and time established in a written payment program agreement16 between the department and the taxpayer) under the amnesty program17 is limited to the period determined by the department, not to exceed18 eight (8) regular business weeks ending before the earlier of the date19 set by the department or July 1, 2006. January 1, 2017. The amnesty20 program must provide that, upon payment by a taxpayer to the21 department of all listed taxes due from the taxpayer for a tax period (or22 payment of the unpaid listed taxes in full in the manner and time23 established in a written payment program agreement between the24 department and the taxpayer), entry into an agreement that the taxpayer25 is not eligible for any other amnesty program that may be established26 and waives any part of interest and penalties on the same type of listed27 tax that is being granted amnesty in the current amnesty program, and28 compliance with all other amnesty conditions adopted under a rule of29 the department in effect on the date the voluntary payment is made, the30 department:31 (1) shall abate and not seek to collect any interest, penalties,32 collection fees, or costs that would otherwise be applicable;33 (2) shall release any liens imposed;34 (3) shall not seek civil or criminal prosecution against any35 individual or entity; and36 (4) shall not issue, or, if issued, shall withdraw, an assessment, a37 demand notice, or a warrant for payment under IC 6-8.1-5-1,38 IC 6-8.1-5-3, IC 6-8.1-8-2, or another law against any individual39 or entity;40 for listed taxes due from the taxpayer for the tax period for which41 amnesty has been granted to the taxpayer. Amnesty granted under this42 subsection is binding on the state and its agents. However, failure to

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1 pay to the department all listed taxes due for a tax period invalidates2 any amnesty granted under this subsection for that tax period. The3 department shall conduct an assessment of the impact of the tax4 amnesty program on tax collections and an analysis of the costs of5 administering the tax amnesty program. As soon as practicable after the6 end of the tax amnesty period, the department shall submit a copy of7 the assessment and analysis to the legislative council in an electronic8 format under IC 5-14-6. The department shall enforce an agreement9 with a taxpayer that prohibits the taxpayer from receiving amnesty in

10 another amnesty program.11 (d) For purposes of subsection (c), a liability for a listed tax is due12 and payable if:13 (1) the department has issued:14 (A) an assessment of the listed tax and under IC 6-8.1-5-1;15 (B) a demand for payment under IC 6-8.1-5-3; or16 (B) (C) a demand notice for payment of the listed tax under17 IC 6-8.1-8-2;18 (2) the taxpayer has filed a return or an amended return in which19 the taxpayer has reported a liability for the listed tax; or20 (3) the taxpayer has filed a written statement of liability for the21 listed tax in a form that is satisfactory to the department.22 SECTION 36. IC 6-8.1-3-24 IS ADDED TO THE INDIANA CODE23 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY24 1, 2015]: Sec. 24. (a) The department of state revenue may adopt25 emergency rules under IC 4-22-2-37.1 to carry out a tax amnesty26 program under section 17 of this chapter.27 (b) Notwithstanding IC 4-22-2-37.1(g), an emergency rule28 adopted by the department under IC 4-22-2-37.1 expires on the29 date specified in the emergency rule.30 (c) This section expires July 1, 2017.31 SECTION 37. IC 6-8.1-10-12, AS AMENDED BY P.L.1-2009,32 SECTION 59, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE33 JULY 1, 2015]: Sec. 12. (a) This section applies to a penalty related to34 a tax liability to the extent that the:35 (1) tax liability is for a listed tax;36 (2) tax liability was due and payable, as determined under37 IC 6-8.1-3-17(d), for a tax period ending before July 1, 2004;38 January 1, 2013;39 (3) department establishes an amnesty program for the tax40 liability under IC 6-8.1-3-17(c);41 (4) individual or entity from which the tax liability is due was42 eligible to participate in the amnesty program described in

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1 subdivision (3); and2 (5) tax liability is not paid:3 (A) in conformity with a payment program acceptable to the4 department that provides for payment of the unpaid listed5 taxes in full in the manner and time established in a written6 payment program agreement entered into between the7 department and the taxpayer under IC 6-8.1-3-17(c); or8 (B) if clause (A) does not apply, before the end of the amnesty9 period established by the department.

10 (b) Subject to subsection (c), if a penalty is imposed or otherwise11 calculated under any combination of:12 (1) IC 6-8.1-1-8;13 (2) section 2.1 of this chapter;14 (3) section 3 of this chapter;15 (4) section 3.5 of this chapter;16 (4) (5) section 4 of this chapter;17 (5) (6) section 5 of this chapter;18 (6) (7) section 6 of this chapter;19 (7) (8) section 7 of this chapter;20 (8) (9) section 9 of this chapter; or21 (9) (10) IC 6-6;22 an additional penalty is imposed under this section. The amount of the23 additional penalty imposed under this section is equal to the sum of the24 penalties imposed or otherwise calculated under the provisions listed25 in subdivisions (1) through (9). (10).26 (c) The additional penalty provided by subsection (b) does not apply27 if all of the following apply:28 (1) The department imposes a penalty on a taxpayer or otherwise29 calculates the penalty under the provisions described in30 subsection (b)(1) through (b)(9). (b)(10).31 (2) The taxpayer against whom the penalty is imposed:32 (A) timely files an original tax appeal in the tax court under33 IC 6-8.1-5-1; and34 (B) contests the department's imposition of the penalty or the35 tax on which the penalty is based.36 (3) The taxpayer meets all other jurisdictional requirements to37 initiate the original tax appeal.38 (4) Either the:39 (A) tax court enjoins collection of the penalty or the tax on40 which the penalty is based under IC 33-26-6-2; or41 (B) department consents to an injunction against collection of42 the penalty or tax without entry of an order by the tax court.

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1 (d) The additional penalty provided by subsection (b) does not apply2 if the taxpayer:3 (1) has a legitimate hold on making the payment as a result of an4 audit, bankruptcy, protest, taxpayer advocate action, or another5 reason permitted by the department;6 (2) had established a payment plan with the department before7 May 12, 2005; July 1, 2016; or8 (3) verifies with reasonable particularity that is satisfactory to the9 commissioner that the taxpayer did not ever receive notice of the

10 outstanding tax liability.11 SECTION 38. IC 8-24-17-14, AS ADDED BY P.L.182-2009(ss),12 SECTION 282, IS AMENDED TO READ AS FOLLOWS13 [EFFECTIVE JANUARY 1, 2016]: Sec. 14. (a) Except as otherwise14 provided in this chapter, all provisions of the adjusted gross income tax15 law (IC 6-3) concerning:16 (1) definitions;17 (2) declarations of estimated tax;18 (3) filing of returns;19 (4) remittances;20 (5) incorporation of the provisions of the Internal Revenue Code;21 (6) penalties and interest;22 (7) exclusion of military pay credits for withholding; and23 (8) exemptions and deductions;24 apply to the imposition, collection, and administration of the25 improvement tax.26 (b) IC 6-3-1-3.5(a)(6), IC 6-3-3-3 and IC 6-3-3-5 and IC 6-3-5-1 do27 not apply to the improvement tax.28 (c) Notwithstanding subsections (a) and (b), each employer shall29 report to the department the amount of withholdings of the30 improvement tax attributable to each county. This report shall be31 submitted to the department:32 (1) each time the employer remits to the department the tax that33 is withheld; and34 (2) annually along with the employer's annual withholding report.35 SECTION 39. [EFFECTIVE JULY 1, 2015] (a) IC 6-3-1-3.5,36 IC 6-3-1-20, IC 6-3-2-2, IC 6-3-2-4, IC 6-3-2-14.1, IC 6-3-2-18,37 IC 6-3-2-20, IC 6-3-2-25, and IC 6-5.5-1-2, all as amended by this38 act, apply to taxable years beginning after December 31, 2015.39 (b) IC 6-3-2-5, IC 6-3-2-5.3, IC 6-3-2-14.5, IC 6-3-2-17,40 IC 6-3.5-1.1-7, IC 6-3.5-6-24, and IC 6-3.5-7-9, all as repealed by41 this act, apply only to taxable years beginning before January 1,42 2016.

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1 (c) The legislative council shall provide for the preparation and2 introduction of legislation in the 2016 session of the general3 assembly to correct cross references and make other changes, as4 necessary, to bring provisions that are not added or amended by5 this act into conformity with this act.6 (d) This SECTION expires July 1, 2018.

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COMMITTEE REPORT

Mr. Speaker: Your Committee on Ways and Means, to which wasreferred House Bill 1349, has had the same under consideration andbegs leave to report the same back to the House with therecommendation that said bill be amended as follows:

Page 1, delete lines 1 through 15.Delete pages 2 through 9.Page 10, delete lines 1 through 12.Page 13, line 4, after "(22)" insert "(20)".Page 13, line 4, reset in roman "Subtract income that is:".Page 13, reset in roman lines 5 through 7.Page 13, line 18, delete "(20)" and insert "(21)".Page 14, line 22, delete "(21)" and insert "(22)".Page 16, reset in roman lines 3 through 6.Page 16, line 7, reset in roman "(12)".Page 16, line 7, delete "(11)".Page 17, line 21, delete "(12)" and insert "(13)".Page 18, reset in roman lines 23 through 26.Page 18, line 27, reset in roman "(10)".Page 18, line 27, delete "(9)".Page 19, line 30, delete "(10)" and insert "(11)".Page 20, line 3, delete "(11)" and insert "(12)".Page 21, reset in roman lines 5 through 8.Page 21, line 9, reset in roman "(10)".Page 21, line 9, delete "(9)".Page 22, line 12, delete "(10)" and insert "(11)".Page 22, line 27, delete "(11)" and insert "(12)".Page 23, reset in roman lines 24 through 27.Page 23, line 28, reset in roman "(8)".Page 23, line 28, delete "(7)".Page 25, line 3, delete "(8)" and insert "(9)".Page 28, line 37, reset in roman "Receipts from".Page 28, reset in roman lines 38 through 39.Page 28, line 40, reset in roman "Indiana under section 2.2 of this

chapter.".Page 29, reset in roman lines 11 through 18.Page 29, delete lines 19 through 42.Page 30, delete lines 1 through 12.Page 33, between lines 31 and 32, begin a new paragraph and insert:"(t) Sales of a broadcaster that arise from or relate to the

broadcast or other distribution of film programming or radio

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programming by any means are in this state if the commercialdomicile of the broadcaster's customer is in this state. Sales towhich this subsection applies include income from advertising andlicensing income from distributing film programming or radioprogramming. For purposes of this subsection, the followingdefinitions apply:

(1) "Broadcaster" means a taxpayer that is a television orradio station licensed by the Federal CommunicationsCommission, a television or radio broadcast network, a cableprogram network, or a television distribution company. Theterm "broadcaster" does not include a cable service provideror a direct broadcast satellite system.(2) "Commercial domicile" has the meaning set forth inIC 6-3-1-22.(3) "Customer" means a person, corporation, partnership,limited liability company, or other entity, such as anadvertiser or licensee, that has a direct connection orcontractual relationship with the broadcaster under whichrevenue is derived by the broadcaster. The term "customer"does not include an advertising agency placing advertising onbehalf of its client. The client of such an advertising agency isthe customer.(4) "Film programming" means one (1) or moreperformances, events, or productions (or segments ofperformances, events, or productions) intended to bedistributed for visual and auditory perception, including butnot limited to news, entertainment, sporting events, plays,stories, or other literary, commercial, educational, or artisticworks.(5) "Radio programming" means one (1) or moreperformances, events, or productions (or segments ofperformances, events, or productions) intended to bedistributed for auditory perception, including but not limitedto news, entertainment, sporting events, plays, stories, orother literary, commercial, educational, or artistic works.".

Page 35, delete lines 10 through 38.Page 43, delete lines 17 through 42.Delete page 44.Page 45, delete lines 1 through 18.Page 46, delete lines 14 through 42.Delete pages 47 through 51.Page 52, delete lines 1 through 20.

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Page 53, line 30, delete "." and insert ", except for expendituresthat were approved by the Indiana economic developmentcorporation before January 1, 2016.".

Page 55, delete lines 13 through 30.Page 56, line 31, delete "IC 6-3-3-5," and insert "and IC 6-3-3-5".Page 56, line 32, reset in roman "do".Page 56, line 32, delete "does".Page 57, line 12, delete "IC 6-3-3-5," and insert "and IC 6-3-3-5".Page 57, line 13, reset in roman "do".Page 57, line 13, delete "does".Page 59, line 3, delete "IC 6-3-3-5," and insert "and IC 6-3-3-5".Page 59, line 4, reset in roman "do".Page 59, line 4, delete "does".Page 62, reset in roman lines 20 through 23.Page 63, between lines 36 and 37, begin a new paragraph and insert:"(e) For purposes of this section, if a taxpayer:

(1) claimed the special allowance for qualified disasterassistance property under Section 168(n) of the InternalRevenue Code;(2) made an election under Section 179C of the InternalRevenue Code to expense costs for qualified refinery propertyequal to the amount of adjusted gross income that would havebeen computed had an election for federal income taxpurposes not been made for the year;(3) made an election under Section 181 of the InternalRevenue Code to expense costs for a qualified film ortelevision production equal to the amount of adjusted grossincome that would have been computed had an election forfederal income tax purposes not been made for the year; or(4) treated a loss from the sale or exchange of preferred stockin:

(A) the Federal National Mortgage Association, establishedunder the Federal National Mortgage Association CharterAct (12 U.S.C. 1716 et seq.); or(B) the Federal Home Loan Mortgage Corporation,established under the Federal Home Loan MortgageCorporation Act (12 U.S.C. 1451 et seq.);

as an ordinary loss under Section 301 of the EmergencyEconomic Stabilization Act of 2008 for any taxable yearbeginning before January 1, 2015;

the taxpayer shall continue to add or subtract the amountsrequired under this section for the taxable years beginning after

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December 31, 2014, as provided in this section as in effect onDecember 31, 2014. However, any amount otherwise allowable asa deduction but not deducted in a taxable year beginning beforeJanuary 1, 2020, shall be deducted in the taxpayer's first taxableyear beginning after December 31, 2019.".

Page 73, line 32, delete "IC 6-3-3-5," and insert "and IC 6-3-3-5".Page 73, line 32, reset in roman "do".Page 73, line 33, delete "does".Page 73, delete lines 41 through 42.Page 74, delete lines 1 through 6.Page 74, line 9, delete "IC 6-3-2-21.7,".Page 74, line 9, delete "IC 6-3-3-5, 6-3-3-5.1,".Page 74, line 10, delete "IC 6-3-3-10,".Page 74, line 12, delete "IC 6-3-2-8,".Renumber all SECTIONS consecutively.

and when so amended that said bill do pass.

(Reference is to HB 1349 as introduced.)

BROWN T

Committee Vote: yeas 10, nays 6.

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